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Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 125,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead Fixed overhead $ 6.50 per unit 6.50 per unit 8.50 per unit $ 425,000 per year An italian firm has offered to purchase 20,500 of the components at a price of $26.50 per unit, FOB CMI's plant. The normal selling price is $33.50 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $24.90, 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.

Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 125,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead Fixed overhead $ 6.50 per unit 6.50 per unit 8.50 per unit $ 425,000 per year An italian firm has offered to purchase 20,500 of the components at a price of $26.50 per unit, FOB CMI's plant. The normal selling price is $33.50 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $24.90, 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 125,000 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 20,500 of the components at a price of $26.50 per unit, FOB CMI's plant. The normal selling price is $33.50 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $24.90, so it is reluctant to accept this special order. $ 6.50 per unit 6.50 per unit 8.50 per unit $425,000 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.
Transcribed Image Text:Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 125,000 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 20,500 of the components at a price of $26.50 per unit, FOB CMI's plant. The normal selling price is $33.50 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $24.90, so it is reluctant to accept this special order. $ 6.50 per unit 6.50 per unit 8.50 per unit $425,000 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.
Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 125,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead Fixed overhead $ 6.50 per unit 6.50 per unit 8.50 per unit $ 425,000 per year An Italian firm has offered to purchase 20,500 of the components at a price of $26.50 per unit, FOB CMI's plant. The normal selling price is $33.50 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $24.90, 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 Band C Req A b. Is the cost calculation appropriate? c. Should the offer from the Italian firm be accepted? b. The cost calculation is appropriate c. The offer from the Italian firm should be <Reg A
Transcribed Image Text:Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 125,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead Fixed overhead $ 6.50 per unit 6.50 per unit 8.50 per unit $ 425,000 per year An Italian firm has offered to purchase 20,500 of the components at a price of $26.50 per unit, FOB CMI's plant. The normal selling price is $33.50 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $24.90, 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 Band C Req A b. Is the cost calculation appropriate? c. Should the offer from the Italian firm be accepted? b. The cost calculation is appropriate c. The offer from the Italian firm should be <Reg A
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