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Question 2 of 5 View Policies Show Attempt History < > Current Attempt in Progress Your answer is partially correct. 0.18/0.4 E !!! Bonita has recently started to manufacture RecRobo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a mobile phone. The cost structure to manufacture 19,900 RecRobos is as follows: Cost Direct materials ($46 per robot) $915,400 Direct labour ($34 per robot) 676,600 Variable overhead ($4 per robot) 79,600 Allocated fixed overhead ($22 per robot) 437,800 Total $2,109,400 Bonita is approached by Kennel Inc., which offers to make RecRobo for $82 per unit or $1,631,800. Using incremental analysis, determine whether Bonita should accept this offer under each of the following independent assumptions: Using incremental analysis, determine whether Bonita should accept this offer under each of the following independent assumptions: (1) Assume that $278,600 of the fixed overhead cost is avoidable. (If an amount reduces the net income then enter with a negative sign preceding the number eg.-15,000 or parenthesis, e.g. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) Direct materials $ Direct labour Variable overhead Fixed overhead Purchase price Make 915400 $ 676600 79600 437800 Buy 0 $ 0 Net Income Increase (Decrease) (915400) (676,600) 0 (79,600) 159200 0 1613800 Total annual cost 2109400 (278,600) 1,631,800 1729000 $ 318,400 (2) Assume that none of the fixed overhead is avoidable. However, if the robots are purchased from Kennel Inc., Bonita can use the released productive resources to generate additional income of $178,600. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) $ $ Make i Buy $ i i i $ $ $ Net Income Increase (Decrease) i Question 2 of 5 View Policies Show Attempt History < > Current Attempt in Progress Your answer is partially correct. 0.18/0.4 E !!! Bonita has recently started to manufacture RecRobo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a mobile phone. The cost structure to manufacture 19,900 RecRobos is as follows: Cost Direct materials ($46 per robot) $915,400 Direct labour ($34 per robot) 676,600 Variable overhead ($4 per robot) 79,600 Allocated fixed overhead ($22 per robot) 437,800 Total $2,109,400 Bonita is approached by Kennel Inc., which offers to make RecRobo for $82 per unit or $1,631,800. Using incremental analysis, determine whether Bonita should accept this offer under each of the following independent assumptions: Using incremental analysis, determine whether Bonita should accept this offer under each of the following independent assumptions: (1) Assume that $278,600 of the fixed overhead cost is avoidable. (If an amount reduces the net income then enter with a negative sign preceding the number eg.-15,000 or parenthesis, e.g. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) Direct materials $ Direct labour Variable overhead Fixed overhead Purchase price Make 915400 $ 676600 79600 437800 Buy 0 $ 0 Net Income Increase (Decrease) (915400) (676,600) 0 (79,600) 159200 0 1613800 Total annual cost 2109400 (278,600) 1,631,800 1729000 $ 318,400 (2) Assume that none of the fixed overhead is avoidable. However, if the robots are purchased from Kennel Inc., Bonita can use the released productive resources to generate additional income of $178,600. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) $ $ Make i Buy $ i i i $ $ $ Net Income Increase (Decrease) i
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Managerial Accounting Tools for Business Decision Making
ISBN: 978-1118856994
4th Canadian edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly
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