Assume that none of the fixed overhead can be reduced (avoided) However, if the

Question

Assume that none of the fixed overhead can be reduced (avoided) However, if the robots are purchased from Padong Inc. Selleck can use th released productive resources to generate additional income of $321,600.
Selleck has recently started the manufacture of RecRobo, a three wheeled robot that can scan ahome for fires and gas leaks and then transmit this information to a mobile phone. The cost structure to manufacture 20,100 RecRobo’s is as follows.
Direct materials ( $40 per robot) $804,000
Direct labor ($30 per robot) 603,000
Variable overhead ($4 per robot ) 80,400
Allocated fixed overhead ($25 per robot) 502,500
Total 1,989,900
Selleck is approached by Padong Inc. which offers to make RecRobo for $89 per unit or $1,788,900. Use incremental analysis determine whether Selleck should accept this offer under each of the following independent assumptions.
Make buy net income increase/decrease
Direct materials
Direct labor
Variable overhead
Opportunity cost
Purchase price
Totals
Should offer be accepted

Explanation / Answer

i can not post exact column by this way. here is your answer http://webcache.googleusercontent.com/search?q=cache:bwKPtVbZHYYJ:ww2.justanswer.com/uploads/BusinessTutor/2011-02-03_000417_selleck.xls+f+the+robots+are+purchased+from+Padong+Inc.&cd=1&hl=en&ct=clnk&gl=us&source=www.google.com

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