>> Accounting Basics
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.
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
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.