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Integrated Masters Inc. (IMI) is presently operating at 80% of capacily dinu component. The cost structure of the component is as follows: 2$ 6.40 per unit Raw materials Direct labor 6.40 per unit 8.40 per unit $409, 200 per year Variable overhead Fixed overhead An Italian firm has offered to purchase 20,400 of the components at a price of $26.0 per unit, FOB IMI's plant. The normal selling price is $33.2 per component. This special order will not affect any of IMI's "normal" business. Management calculated that the cost per component is $24.5, 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?

Integrated Masters Inc. (IMI) is presently operating at 80% of capacily dinu component. The cost structure of the component is as follows: 2$ 6.40 per unit Raw materials Direct labor 6.40 per unit 8.40 per unit $409, 200 per year Variable overhead Fixed overhead An Italian firm has offered to purchase 20,400 of the components at a price of $26.0 per unit, FOB IMI's plant. The normal selling price is $33.2 per component. This special order will not affect any of IMI's "normal" business. Management calculated that the cost per component is $24.5, 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?

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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Integrated Masters Inc. (IMI) is presently operating at 80% of capacity and manufacturing 124,000 units of a patented electronic component. The cost structure of the component is as follows: 6.40 per unit 6.40 per unit 8.40 per unit $409, 200 per year Raw materials Direct labor Variable overhead Fixed overhead An Italian firm has offered to purchase 20,400 of the components at a price of $26.0 per unit, FOB IMI's plant. The normal selling price is $33.2 per component. This special order will not affect any of IMI's "normal" business. Management calculated that the cost per component is $24.5, 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? (Round your answer to 2 decimal places.) Fixed overhead per unit
Transcribed Image Text:Integrated Masters Inc. (IMI) is presently operating at 80% of capacity and manufacturing 124,000 units of a patented electronic component. The cost structure of the component is as follows: 6.40 per unit 6.40 per unit 8.40 per unit $409, 200 per year Raw materials Direct labor Variable overhead Fixed overhead An Italian firm has offered to purchase 20,400 of the components at a price of $26.0 per unit, FOB IMI's plant. The normal selling price is $33.2 per component. This special order will not affect any of IMI's "normal" business. Management calculated that the cost per component is $24.5, 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? (Round your answer to 2 decimal places.) Fixed overhead per unit
Fixed overhead $409, 200 per year An Italian firm has offered to purchase 20,400 of the components at a price of $26.0 per unit, FOB IMIl's plant. The normal selling price is $33.2 per component. This special order will not affect any of IMI's "normal" business. Management calculated that the cost per component is $24.5, 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 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 < Req A Req Band C
Transcribed Image Text:Fixed overhead $409, 200 per year An Italian firm has offered to purchase 20,400 of the components at a price of $26.0 per unit, FOB IMIl's plant. The normal selling price is $33.2 per component. This special order will not affect any of IMI's "normal" business. Management calculated that the cost per component is $24.5, 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 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 < Req A Req Band C
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