Integrated Masters Inc. (IMI) is presently operating at 80% of capacity and manufacturing 112,000 units of...
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Integrated Masters Inc. (IMI) is presently operating at 80% of capacity and manufacturing 112,000 units of a patented electronic component. The cost structure of the component is as follows: bes Raw materials. Direct labor Variable overhead i Fixed overhead $ 7.40 per unit 7.40 per unit 9.40 per unit $481,600 per year An Italian firm has offered to purchase 21,400 of the components at a price of $31.0 per unit, FOB IMI's plant. The normal selling price is $36.2 per component. This special order will not affect any of IMI's "normal" business. Management calculated that the cost per component is $28.5, 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? Integrated Masters Inc. (IMI) is presently operating at 80% of capacity and manufacturing 112,000 units of a patented electronic component. The cost structure of the component is as follows: bes Raw materials. Direct labor Variable overhead i Fixed overhead $ 7.40 per unit 7.40 per unit 9.40 per unit $481,600 per year An Italian firm has offered to purchase 21,400 of the components at a price of $31.0 per unit, FOB IMI's plant. The normal selling price is $36.2 per component. This special order will not affect any of IMI's "normal" business. Management calculated that the cost per component is $28.5, 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?
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