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Selleck has recently started the manufacture of recrobo a
Course:- Accounting Basics
Reference No.:- EM13601443




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Selleck has recently started the manufacture of 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 19,940 RecRobo's is as follows.

Cost
Direct materials ($40 per robot $797,600
Direct labor ($33 per robot) 658,020
Variable overhead ($4 per robot) 79,760
Allocated fixed overhead ($23 per robot) 458,620
Total $1,994,000

Selleck is approached by Padong Inc. which offers to make RecRobo for $89 per unit or $1,774,660.Using incremental analysis, determine whether Selleck should accept this offer under each of the following independent assumptions.




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