Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 117,000 units of a patented electronic component. The cost structure of the component is as follows:

Raw materials	$ 7.90	per unit
Direct labor	7.90	per unit
Variable overhead	9.90	per unit
Fixed overhead	$ 561,600	per year

An Italian firm has offered to purchase 21,900 of the components at a price of $33.50 per unit, FOB CMI's plant. The normal selling price is $37.70 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $30.50, 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 117,000 units of a patented electronlc component. The cost structure of the component Is as follows: An Itallan firm has offered to purchase 21,900 of the components at a price of $33.50 per unit, FOB CMI's plant. The normal selling price is $37.70 per component. This speclal order will not affect any of CMl's "normal" business. Management calculated that the cost per component is $30.50, so it Is reluctant to accept this speclal order. Required: a. Calculate the fixed overhead per unlt? b. Is the cost calculation appropriate? c. Should the offer from the Itallan 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. Complete this question by entering your answers in the tabs below. b. Is the cost calculation appropriate? c. Should the offer from the Italian firm be accepted