Circuit Masters Incorporated (CMI) is presently operating at 80 of capacity and manufacturing 111,000 units of a patented electronic component The cost structure of the component is as follows Raw materials $ 7 30 per unit Direct labor 7 30 per unit Variable overhead 9 30 per unit Fixed overhead $ 466,200 per year An Italian firm has offered to purchase 21,300 of the components at a price of $30 50 per unit, FOB CMI's plant The normal selling price is $35 90 per component This special order will not affect any of CMI's normal business Management calculated that the cost per component is $28 10, 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 Circuit Masters Incorporated (CMI) is presently operating at 80 of capacity and manufacturing 111,000 units of a patented electronic component The cost structure of the component is as follows An Italian firm has offered to purchase 21,300 of the components at a price of $30 50 per unit, FOB CMI's plant The normal selling price is $35 90 per component This special order will not affect any of CMI's normal business Management calculated that the cost per component is $28 10, 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 Calculate the fixed overhead per unit Note Round your answer to 2 decimal places

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 30, 2024

Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 111,000 units of a patented electronic component. The cost structure of the

Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 111,000 units of a patented electronic component. The cost structure of the component is as follows:

Raw materials	$ 7.30	per unit
Direct labor	7.30	per unit
Variable overhead	9.30	per unit
Fixed overhead	$ 466,200	per year

An Italian firm has offered to purchase 21,300 of the components at a price of $30.50 per unit, FOB CMI's plant. The normal selling price is $35.90 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $28.10, 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?

image text in transcribed

Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 111,000 units of a patented electronic component. The cost structure of the component is as follows: An Italian firm has offered to purchase 21,300 of the components at a price of $30.50 per unit, FOB CMI's plant. The normal selling price is $35.90 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $28.10, 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. Calculate the fixed overhead per unit? Note: Round your answer to 2 decimal places