So, Kister Electronics had a fixed factory overhead budget for 20X0 of $72 million and the company planned to make and sell 9 million units of a particular communications device. All variable manufacturing costs per unit were $18. The budgeted income statement contained the following:

Sales-$252,000,000

Manufacturing cost of goods sold- $234,000,000

Gross Margin- 18,000,000

Deduct selling and adminstrative expenses- 9,000,000

Operating Income- $9,000,000

For simplicity, assume that the actual variable cost per unit and total fixed costs were exactly as budgeted.

I could not answer the following:

1. compute kisters budgeted fixed factory overhead per unit

2. near the end of 20X0, a large computer manufacturer offered to buy 150,000 units for $3.45 million on a one time special order. I realized that this offer will have only a modes effect on selling and administrative costs. They will increase by a $10,000 fee paid to our sales agent. Compute the effect on operating income if the offer is accepted?

3. What factors should the president of Kister consider before finally deciding whether to accept the offer?

4. Suppose the original budget for fixed manufacturing costs was $72 million, but the budgeted units of product were 4.5 million. How would your answer for Number 1 and 2 change? Be specific.