SCircuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 110,000 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 21,200 of the components at a price of $30.00 per unit, FOB CMI's plant. The normal sellingprice is $35.60 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the costper 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 unit7.20 per unit9.20 per unit$ 451,000 per yearComplete this question by entering your answers in the tabs below.Req AReq B and CCalculate the fixed overhead per unit?Note: Round your answer to 2 decimal places.Fixed overhead per unit< Req AReq B and C >

Relevant cost is the cost which is associated with a decision It can change with the attributes of…

Answered: S Circuit Masters Incorporated (CMI) is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The Pixels Corporation produces a component used in the manufacture of one of its best-selling products. The costs associated with the production of 10,000 units of this component are presented in the table above. The PCAOB Corp. offered to sell Pixels 10,000 units of the same part at a price of $36 per unit. Assume that Pixels has no alternative use for the factory facilities that would be released. Based on all of the information above, should Pixels manufacture their own part or outsource to PCAOB? Note that if you agree to outsource, you would save $60,000 in indirect fixed costs. Direct Materials $90,000 Direct Manufacturing Labor $130,000 Variable Manufacturing Overhead $60,000 Fixed Manufacturing Overhead $140,000 Total Costs $420,000 a. Buy the part from PCAOB because you save $6 per unit b. Manufacture the part because it saves $6 per unit c. Make the part because you save $2 per unit d. Buy the part from PCAOB because you save $60,000
Division A has the capacity to produce 120,000 units. The normal selling price of each unit is P80. The variable cost incurred for each unit is P42. Total direct fixed cost for the relevant range is P1,150,000. Division B can use the products of Division A as an input in its manufacturing process but is currently acquiring the said products from an outside supplier. The price per unit is P75. Total annual demand is 30,000 units. 1. Assuming sufficient capacity, what is the minimum acceptable transfer price to Division A? 2. Assuming only 22,500 excess capacity, what is the minimum acceptable transfer price to Division A? 3. Assuming no excess capacity, what is the minimum acceptable transfer price to Division A? 4. What is the maximum acceptable transfer price to Division B?
Division A has the capacity to produce 120,000 units. The normal selling price of each unit is P80. The variable cost incurred for each unit is P42. Total direct fixed cost for the relevant range is P1,150,000. Division B can use the products of Division A as an input in its manufacturing process but is currently acquiring the said products from an outside supplier. The price per unit is P75. Total annual demand is 30,000 units. Assuming sufficient capacity, what is the minimum acceptable transfer price to Division A? Assuming only 22,500 excess capacity, what is the minimum acceptable transfer price to Division A? Assuming only 22,500 excess capacity and that Division A can avoid variable selling cost per unit of P4 but will incur a one-time fixed cost of P30,000 for the order, what is the minimum acceptable transfer price to Division A? Assuming no excess capacity, what is the minimum acceptable transfer price to Division A? What is the maximum acceptable transfer…
The Croydon division of CC Industries supplies the Hauser division with 100,000 units per month of an infrared LED that Hauser uses in a remote control device it sells. The transfer price of the LED is $8, which is the market price. However, Croydon does not operate at or near capacity. The variable cost to Croydon of the LED is $4.80, while Hauser incurs variable costs (excluding the transfer price) of $12 for each remote control. Hauser’s selling price is $32. Hauser’s manager is considering a promotional campaign. The market research department of Hauser has developed the following estimates of additional monthly volume associated with additional monthly promotional expenses. Additional Monthly Promotional Expenses: $80,000 $120,000 $160,000 Additional Monthly Volume (Units) 10,000 15,000 18,000 Q. As the president of CC Industries, what level of spending would you like the Hauser division manager to select?
Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is three units per hour and for Product MTV is five units per hour. The machine’s capacity is 2,600 hours per year. Both products are sold to a single customer who has agreed to buy all of the company’s output up to a maximum of 4,420 units of Product TLX and 5,995 units of Product MTV. Selling prices and variable costs per unit to produce the products follow. $ per unit Product TLX Product MTV Selling price per unit $ 11.50 $ 6.90 Variable costs per unit 3.45 4.14 Determine the company's most profitable sales mix and the contribution margin that results from that sales mix. (Round per unit contribution margins to 2 decimal places.)
a) Almond Delites manufactures various types of biscuits. FMF Biscuits Ltd has approached Almond Delites with a proposal to sell the company its top-selling biscuit at a price of $22 000 for 20 000 units. The costs shown are associated with the production of 20 000 units of almond biscuits: Direct materials: $12,000 Direct labor: $5,000 Variable overhead: $8,000 Fixed overhead: $25,000 The manufacturing overhead consists of $2 000 of variable costs, with the balance being allocated to fixed costs. Assume that 40% of the fixed costs would be avoidable if the almond biscuits were purchased externally rather than produced internally. Required: i)Should Almond Delites make or buy the almond biscuit? ii) What qualitative factors should Almond Delites consider before making its decision?

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