Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 131,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead Fixed overhead $ 7.10 per unit 7.10 per unit 9.10 per unit $ 524,000 per year An Italian firm has offered to purchase 21,100 of the components at a price of $29.50 per unit, FOB CMI's plant. The normal selling price is $35.30 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $27.30, 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?

Circuit Masters incorporated (CMI) is presently operating at 80% of capacity and manufacturing 131,000 units of a patented electronic component. The cost structure of the component is as follows: An italian firm has offered to purchase 21,100 of the components at a price of $29.50 per unit, FOB CMi's plant The normal selling price is $35.30 per component. This special order will not affect any of CMil's "normal" business. Management calculated that the cost per component is $27.30, so it is reluctant to accept this special order Required: o. Caiculate the fixed overhead per unit? b. Is the cost calculation appropriate? c. Should the offer from the italian firm be accepted