Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Integrated Masters Inc. (IMI) is presently operating at 80% of capacity and manufacturing 131,000 units of a patented electronic component. The cost structure of the

image text in transcribed
image text in transcribed
Integrated Masters Inc. (IMI) 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 $29.5 per unit, FOB IMI's plant. The normal selling price is $35.3 per component. This special order will not affect any of IMI's "normal" business Management calculated that the cost per component is $27.3, 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. Reg A Reg B and C Calculate the fixed overhead per unit? (Round your answer to 2 decimal places.) Fixed overhead per unit Integrated Masters Inc. (IMI) 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 $29.5 per unit, FOB IMI's plant. The normal selling price is $35.3 per component. This special order will not affect any of IMI's "normal" business. Management calculated that the cost per component is $27.3, 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. Req A Rga Band b. Is the cost calculation appropriate? c. Should the offer from the Italian firm be accepted? b. The cost calculation is appropriate The offer from the Italian firm should be c.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Managerial Accounting Creating Value In A Dynamic Business Environment

Authors: Ronald Hilton, David Platt

12th Edition

1260566390, 9781260566390

More Books

Students also viewed these Accounting questions

Question

=+a) Fit a regression model with just Year as the predictor.

Answered: 1 week ago