Please help me. Thankyou. Req AReq B and Cb. Is the cost calculation appropriate?c. Should the offer from the Italian firm be accepted?b. The cost calculation is appropriatec. The offer from the Italian firm should be Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 122,000 units of a patented electroniccomponent. The cost structure of the component is as follows:Raw materialsDirect laborVariable overheadFixed overheadAn Italian firm has offered to purchase 20,200 of the components at a price of $25.00 per unit, FOB CMI's plant. The normal sellingprice is $32.60 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the costper component is $23.70, so it is reluctant to accept this special order.$ 6.20 per unit6.20 per unit8.20 per unit$ 378,200 per yearRequired:a. Calculate the fixed overhead per unit?b. Is the cost calculation appropriate?c. Should the offer from the Italian firm be accepted?Req AComplete this question by entering your answers in the tabs below.Req B and CAnswer is not complete.Calculate the fixed overhead per unit?Note: Round your answer to 2 decimal places.Fixed overhead per unit$ 23.70

In decision making process we consider only incremental cost that is relevant cost. Variable cost…

Answered: Circuit Masters Incorporated (CMI) is…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 15E

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S Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 110,000 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 21,200 of the components at a price of $30.00 per unit, FOB CMI's plant. The normal selling price is $35.60 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $27.70, so it is reluctant to accept this special order. Required: a. Calculate the fixed overhead per unit. b. Is the cost calculation appropriate? c. Should the offer from the Italian firm be accepted? $ 7.20 per unit 7.20 per unit 9.20 per unit $ 451,000 per year 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
Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 128,000 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 20,800 of the components at a price of $28.00 per unit, FOB CMI's plant. The normal selling price is $34.40 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $26.10, so it is reluctant to accept this special order. $ 6.80 per unit 6.80 per unit 8.80 per unit $ 473,600 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
Integrated Masters Inc. (IMI) is presently operating at 80% of capacity and manufacturing 110,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead 7. 20 per unit 7.20 per unit 9.20 per unit $451,000 per year $ Fixed overhead An Italian firm has offered to purchase 21,200 of the components at a price of $30.0 per unit, FOB IMI's plant. The normal selling price is $35.6 per component. This special order will not affect any of IMI's "normal" business. Management calculated that the cost per component is $27.7, so it is reluctant to accept this special order. Required: a. Calculate the fixed overhead per unit? b. Is the cost calculation appropriate? c. Should the offer from the Italian firm be accepted?
Specter Company makes 20,000 units per year of a part it uses in the products it manufactures.The unit product cost of this part is computed as follows:Direct materials $25.10Direct labour 18.20Variable manufacturing overhead 2.40Fixed manufacturing overhead 13.40Unit product cost $56.70An outside supplier has offered to sell the company all these parts it needs for $56.00 a unit. Ifthe company accepts this offer, the facilities now being used to make the part could be used tomake more units of a product that is in high demand. The additional contribution margin on thisother product would be $50,000 per year.If the part were purchased from the outside supplier, all the direct labour cost of the part wouldbe avoided. However, $5.10 of the fixed manufacturing overhead cost being applied to the partwould continue even if the part were purchased from the outside supplier. This fixedmanufacturing overhead cost would be applied to the company's remaining products.Required:Part a:Calculate…
Beat Company manufactures 8,000 units of a certain component per year. This component is used in the production of the main product. The following are the costs to make the component per unit: Direct materials $4 Direct labor $4 Variable overhead $3 Fixed overhead $5 If Beat Company buys the component from an outside supplier, the company can rent out the released facilities for P12,360 a year. The cost of the component per unit as quoted by the supplier is P15. 25% of fixed overhead applied in the manufacture of the component will continue regardless of what decision is made. For all purchase made by the company, freight and handling costs are applied at 2% of the purchase price. The direct materials cost presented above is exclusive of such freight and handling cost. What is the advantage or disadvantage of buying the component?A. P12,240 advantage B. 24,600 advantage C. 5,400 disadvantage D. 8,600 advantage
Circult Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 130,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead Fixed overhead $ 7.00 per unit 7.00 per unit 9.00 per unit $ 507,000 per year An Italian firm has offered to purchase 21,000 of the components at a price of $29.00 per unit, FOB CMI's plant. The normal selling price is $35.00 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $26.90, so it is reluctant to accept this special order. 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…
Mohave Corp. is considering outsourcing production of ht eumbrella tote bag included with some of its products. The company has received a bid from a supplier in Vietnam to produce 9600 units per year for 7.00 each. Mohave has the following information about the cost of producing tote bags:Directs materials 3.00Direct Labor 2.00Variable manufacturing overhead 1.00Fixed manufacturing overhead 2.50Total cost per unit 8.50Mohave has deteremined that all variable costs could be eliminated by outsourcing the tote bads, while 75 percent of the fixed overhead cost is unavoidable. At this time, Mohave has no specifif use in mind for the space currently dedicated to producing the tote bags.1.) Compute the difference in cost between making and buying the umbrella tote bag. 2.) Based strictly on the incremental analysis should mohave buy the tote bags or contiunue to make them? 3-a.) Suppose that the space mohave currently uses to make the bags could be utilized by a new product line that would…
Abolt Corporation makes 40,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: direct materials $11.30 direct labour $22.70 variable manufacturing overhead $1.20 fixed manufacturing overhead $24.70 unit product cost $59.90 An outside supplier has offered to sell the company all of these parts it needs for$46.20 a unit. If the company accepts this offer, the facilities now being used tomake the part could be used to make more units of a product that is in highdemand. The additional contribution margin on this other product would be$264,000 per year. Additionally, $21.90 of the fixed manufacturing overheadcost being applied to the part would continue even if the part were purchasedfrom the outside supplier.Required:I. What is the net total dollar advantage (disadvantage) of purchasing the partrather than making it?II. Calculate the maximum amount per unit the company should be willing topay an…
Integrated Masters Inc. (IMI) is presently operating at 50% of capacity and manufacturing 50,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials $ 1.50 per unit Direct labor 1.50 per unit Variable overhead 2.00 per unit Fixed overhead $ 100,000 per year An Italian firm has offered to purchase 30,000 of the components at a price of $6 per unit, FOB IMI’s plant. The normal selling price is $8 per component. This special order will not affect any of IMI’s “normal” business. Management calculated that the cost per component is $7, so it is reluctant to accept this special order.Required: Calculate the fixed overhead per unit? Is the cost calculation appropriate? Should the offer from the Italian firm be accepted?
Ahrends Corporation makes 43,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 12.80 23.30 2.10 26.50 $ 64.70 An outside supplier has offered to sell the company all of these parts it needs for $51.00 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $301,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $23.40 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.…
Talladega Tire and Rubber Company has capacity to produce 170,500 tires. Talladega presently produces and sells 133,900 tires for the North American market at a price of $179 per tire. Talladega is evaluating a special order from a European automobile company, Autobahn Motors. Autobahn is offering to buy 19,500 tires for $110.95 per tire. Talladega’s accounting system indicates that the total cost per tire is as follows: Direct materials $54 Direct labor 21 Factory overhead (58% variable) 24 Selling and administrative expenses (40% variable) 28 Total $127 Talladega pays a selling commission equal to 5% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $7.56 per tire. In addition, Autobahn has made the order conditional on…
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