Cullumber, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled robot that can scan a home for fires and gas lear and then transmit this information to a smartphone. The cost structure to manufacture 19,200 Tri-Robos is as follows. Direct materials ($51 per robot) Direct labor ($38 per robot) Variable overhead ($7 per robot) Allocated fixed overhead ($31 per robot) Total Cost $979.200 729,600 134,400 595,200 $2,438,400 Cullumber is approached by Tienh Inc., which offers to make Tri-Robo for $116 per unit or $2,227,200. Following are independent assumptions
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
![Cullumber, 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 19,200 Tri-Robos is as follows.
Direct materials ($51 per robot)
Direct labor ($38 per robot)
Variable overhead ($7 per robot)
Allocated fixed overhead ($31 per robot)
Total
Cost
$979,200
729,600
134,400
595,200
$2,438,400
Cullumber is approached by Tienh Inc., which offers to make Tri-Robo for $116 per unit or $2,227,200.
Following are independent assumptions.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4372ec4d-b133-43db-9782-a231351f841b%2F1092c42a-1a11-4274-9b04-fc6f77b34251%2Fbdwhsxw_processed.jpeg&w=3840&q=75)
![Assume that $405,000 of the fixed overhead cost can be avoided. (Enter negative amounts using either a negative sign preceding the
number eg.-45 or parentheses eg. (45))
Direct materials
Direct labor
Variable overhead
Fixed overhead
Purchase price
Total annual cost
The offer should be accepted
Show Transcribed Text
Direct materials
Direct labor
Variable overhead
$
Fixed overhead
Opportunity cost
Purchase price
Make
Totals
Using incremental analysis, determine whether Cullumber should accept this offer.
979200
729600
Make
134400
595200
2438400
Buy
S
190200
2227200
Buy
2417400
Assume that none of the fixed overhead can be avoided. However, if the robots are purchased from Tienh Inc., Cullumber 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 e.g (45).)
$
$
Net Income
Increase
(Decrease)
979200
729600
Net Income
Increase
(Decrease)
134400
405000
-2227200
21000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4372ec4d-b133-43db-9782-a231351f841b%2F1092c42a-1a11-4274-9b04-fc6f77b34251%2Fonjh9fg_processed.jpeg&w=3840&q=75)
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