Answer:
Jobs Inc.
1. The offer should not be accepted.
2. The offer should be accepted.
Explanation:
a) Data and Calculations:
Units of Tri-Robos to be manufactured = 21,300
Costs of manufacturing:
Direct materials $1,086,300
Direct labor ($39 per robot) 830,700
Variable overhead ($5 per robot) 106,500
Allocated fixed overhead ($28 per robot) 600,000
Total $2,623,500
Unit cost = $123.17 ($2,623,500/21,300)
Price from Tiench Inc per unit = $113
Total offer price = $2,406,900 ($113 * 21,300)
Make Buy Net Income Increase (Decrease)
Direct materials $1,086,300 $ $
Direct labor 830,700
Variable overhead 106,500
Fixed overhead 195,000
Purchased price 2,406,900
Totals $2,218,500 $2,406,900 $188,400 Decrease
Make Buy
Direct materials $1,086,300
Direct labor ($39 per robot) 830,700
Variable overhead ($5 per robot) 106,500
Allocated fixed overhead ($28 per robot) 600,000
Total $2,623,500 $2,406,900
Opportunity cost 375,000
Total $2,998,500 $2,406,900 $591,600
