Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 126,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead Fixed overhead $ 6.60 per unit 6.60 per unit 8.60 per unit $441,000 per year An Italian firm has offered to purchase 20,600 of the components at a price of $27.00 per unit, FOB CMI's plant. The normal selling price is $33.80 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $25.30, so it is reluctant to accept this special order. Required: Calen 1 por unit?
Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 126,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead Fixed overhead $ 6.60 per unit 6.60 per unit 8.60 per unit $441,000 per year An Italian firm has offered to purchase 20,600 of the components at a price of $27.00 per unit, FOB CMI's plant. The normal selling price is $33.80 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $25.30, so it is reluctant to accept this special order. Required: Calen 1 por unit?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ll.174.
Subject :- Account
Transcribed Image Text:Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 126,000 units of a patented electronic
component. The cost structure of the component is as follows:
Raw materials
Direct labor
Variable overhead
Fixed overhead
An Italian firm has offered to purchase 20,600 of the components at a price of $27.00 per unit, FOB CMI's plant. The normal selling
price is $33.80 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost
per component is $25.30, so it is reluctant to accept this special order.
$ 6.60 per unit
6.60 per unit
8.60 per unit
$441,000 per year
Required:
a. Calculate the fixed overhead per unit?
b. Is the cost calculation appropriate?
c. Should the offer from the Italian firm be accepted?
Complete this question by entering your answers in the tabs below.
Req A
Req B and C
Calculate the fixed overhead per unit?
Note: Round your answer to 2 decimal places.
Fixed overhead per unit
Req A
Req B and C >
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