Answer:
case 1: when $405,000 fixed overhead cost can be avoided
make buy net income
direct material
994700 0 994700
direct labor 832300 0 832300
variable overhead 101500 0 101500
fixed overhead 600000 195000 405000
purchase price 0 2314200 (2314200)
total 2528500 2509200 19300
YES,jobs should accept the offer because it results in saving of $19300
CASE 2: when no fixed overhead can be avoided
make buy net income
direct material 994700 0 994700
direct labour 832300 0 832300
variable overhead 101500 0 101500
fixed overhead 600000 600000 0
opportunity cost 375000 0 375000
purchase price 0 2314200 (2314200)
total cost 2903500 2914200 (10700)
NO, jobs shold not accept the offer because it results in loss of $10700
