Question

CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Exercise 20-6 Jobs, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a smartphone. The cost structure to manufacture 20,000 Tri-Robos is as follows. Direct materials ($50 per robot) Direct labor ($40 per robot) Variable overhead ($6 per robot) Allocated fixed overhead ($30 per robot) Total Cost $1,000,000 800,000 120,000 600,000 $2,520,000 Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $115 per unit or $2,300,000. Following are independent assumptions. Your answer is partially correct. Try again. Assume that $405,000 of the fixed overhead cost can be avoided. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Net Income Increase (Decrease) Make Direct materials J 1,000,000 J 1,000,000 800,000 Direct labor Í 800,000 acy Policy. I 2000-2019 John Wiley & Sons, Inc. All Rights Reserved. A Division of John Wiley & Sons. Jns Version 4.24.16.2

Answer 1

When 405,000 of fixed overhead can be avoided
	Make	Buy	Net Income increase
Direct Material	1,000,000		1,000,000
Direct Labor	800,000		800,000
Variable overhead	120,000		120,000
Fixed overhead	600,000	195,000	405,000
Purchase cost		2,300,000	(2,300,000)
Total annual cost	2,520,000	2,495,000	25,000
Accept
Additional Income
	Make	Buy	Net Income increase
Direct Material	1,000,000		1,000,000
Direct Labor	800,000		800,000
Variable overhead	120,000		120,000
Fixed overhead	600,000	600,000	-
Opportunity Cost	375,000	-	375,000
Purchase cost		2,300,000	(2,300,000)
Total annual cost	2,895,000	2,900,000	(5,000)
Not accept