Question
Integrated Masters, Inc. (IMI), is presently operating at 50% of capacity and manufacturing 50,000 units of a patented electronic component. The cost structure of the
Integrated Masters, Inc. (IMI), is presently operating at 50% of capacity and manufacturing 50,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials $ 1.50 per unit Direct labor 1.50 per unit Variable overhead 2.00 per unit Fixed overhead $ 100,000 per year An Italian firm has offered to purchase 30,000 of the components at a price of $6 per unit, FOB IMIs plant. The normal selling price is $8 per component. This special order will not affect any of IMIs normal business. Management calculated that the cost per component is $7, so it is reluctant to accept this special order. Required: a. Calculate the fixed overhead per unit?
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