- Intermediate Managerial Accounting II (2020/2021 Winter Term Philco Fire Alarms has a factory in Ft. Saskatchewan with a maximum capacity of 9,000 MH's per month. Philco currently has a monthly budget of 8,500 MH's. Per unit cost data for their light industrial fire alarms is as follows: Direct Materials per unit $22.00 Direct Labour 18.00 Variable Selling and Administration 7.00 Total Manufacturing Overhead 20.00 Total Costs per unit $67.00 It requires 6 minutes of machine time (-1 MH) to produce one alarm. Fixed overhead is allocated at $80 per MH. The normal selling price for an alarm is $75. K-Co Construction has offered to buy 25,000 alarms at an offer price of $62.00 per unit. There would be no variable selling and administration costs if the order was accepted. Question #6 - Should Philco accept the K-Co offer? If Philco were to accept what would the effect on operating income? (6 marks) 7 A - BIG ! 8- Philco Fire Alarms has a factory in Ft. Saskatchewan with a maximum capacity of 9,000 MH's per month. Philco currently has a monthly budget of 8,500 MH's. Per unit cost data for their light industrial fire alarms is as follows: F1 X F2 F3 F4 DII F5 F6 F8 Home F9 End @ $ % & 3