Question: Exercise 12-6 (Part Level Submission) Indigo, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled robot that can scan a home for fires and

Exercise 12-6 (Part Level Submission)

Indigo, 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 21,000 Tri-Robos is as follows.
Cost
Direct materials ($49 per robot) $1,029,000
Direct labor ($41 per robot) 861,000
Variable overhead ($5 per robot) 105,000
Allocated fixed overhead ($29 per robot) 600,000
Total $2,595,000
Indigo is approached by Tienh Inc., which offers to make Tri-Robo for $113 per unit or $2,373,000. Following are independent assumptions.

(a1)

Prepare an incremental analysis. Assume that $405,000 of the fixed overhead cost can be avoided.

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