Sunland, 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 20,800 Tri-Robos is as follows. Direct materials ($50 per robot) Direct labor ($40 per robot) Variable overhead ($6 per robot) Allocated fixed overhead ($29 per robot) Total Following are independent assumptions. Sunland is approached by Tienh Inc., which offers to make Tri-Robo for $115 per unit or $2,392,000. Your answer is partially correct. Direct materials Assume that none of the fixed overhead can be avoided. However, if the robots are purchased from Tienh Inc., Sunland can use the released productive resources to generate additional income of $375,000. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45).) Direct labor Variable overhead Fixed overhead Opportunity cost Purchase price Totals $ Make Cost $1,040,000 832,000 124,800 375000 i 603,200 $2,600,000 0 $ Buy 0 0 $ Based on the above assumptions, indicate whether the offer should be accepted or rejected? Net Income Increase (Decrease) 375000

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Sunland, 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 20,800 Tri-Robos is as follows.
Direct materials ($50 per robot)
Direct labor ($40 per robot)
Variable overhead ($6 per robot)
Allocated fixed overhead ($29 per robot)
Total
Sunland is approached by Tienh Inc., which offers to make Tri-Robo for $115 per unit or $2,392,000.
Following are independent assumptions.
Your answer is partially correct.
Assume that none of the fixed overhead can be avoided. However, if the robots are purchased from Tienh Inc., Sunland can use the
released productive resources to generate additional income of $375,000. (Enter negative amounts using either a negative sign
preceding the number e.g. -45 or parentheses e.g. (45).)
Direct materials
Direct labor
Variable overhead
Fixed overhead
Opportunity cost
Purchase price
Totals
$
Make
Cost
$1,040,000
832,000
124,800
603,200
$2,600,000
375000 i
0
S
$
Buy
0
0
$
Based on the above assumptions, indicate whether the offer should be accepted or rejected?
Net Income
Increase
(Decrease)
0
375000
Transcribed Image Text:Sunland, 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 20,800 Tri-Robos is as follows. Direct materials ($50 per robot) Direct labor ($40 per robot) Variable overhead ($6 per robot) Allocated fixed overhead ($29 per robot) Total Sunland is approached by Tienh Inc., which offers to make Tri-Robo for $115 per unit or $2,392,000. Following are independent assumptions. Your answer is partially correct. Assume that none of the fixed overhead can be avoided. However, if the robots are purchased from Tienh Inc., Sunland can use the released productive resources to generate additional income of $375,000. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Direct materials Direct labor Variable overhead Fixed overhead Opportunity cost Purchase price Totals $ Make Cost $1,040,000 832,000 124,800 603,200 $2,600,000 375000 i 0 S $ Buy 0 0 $ Based on the above assumptions, indicate whether the offer should be accepted or rejected? Net Income Increase (Decrease) 0 375000
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