Financial accounting question Circuit Masters, Inc. (CMI), is presently operating at 80% of capacity andmanufacturing 123,000 units of a patented electronic component. Thecost structure of the component is as follows:Raw materials $ 6.30 per unitDirect labor 6.30 per unitVariable overhead 8.30 per unitFixed overhead $ 492,000 per yearAn Italian firm has offered to purchase 20,300 of the components at aprice of $25.5 per unit, FOB CMI'splant. The normal selling price is $32.9 per component. This specialorder will not affect any of CMI's "normal" business. Managementcalculated that the cost per component is $25.5, so it is reluctant toaccept this special order.Required:Calculate the fixed overhead per unit.

Step 1: Define Fixed OverheadFixed manufacturing overhead is the cost that does not change with the…

Answered: Circuit Masters, Inc. (CMI), is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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