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 20,600 Tri-Robos is as follows.
|
Cost |
| Direct materials ($52 per robot) |
$1,071,200 |
| Direct labor ($40 per robot) |
824,000 |
| Variable overhead ($7 per robot) |
144,200 |
| Allocated fixed overhead ($29 per robot) |
600,000 |
| Total |
$2,639,400 |
Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $118 per unit or $2,430,800.
Following are independent assumptions.
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).)