90.2K

Verified Solution

Link Copied!

Circuit Masters Incorporated (CM) is presently operating at 80% of capacity and manufacturing 113,000 units of a patented electronic component. The cost structure of the component is as follows: An Italian firm has offered to purchase 21,500 of the components at a price of $31.50 per unit, FOB CMr's plant. The normal selling price is $36.50 per component. This special order will not affect any of CMi's "normal" business. Management calculated that the cost per component is $28.90, so it is reluctant to accept this special order. Required: a. Calculate the fixcd overhead per unit. b. Is the cost calculation appropriate? c. Should the offer from the ltalian firm be accepted? Complete this question by entering your answers in the tabs below. Calculate the fixed overhead per unit? Note: Round your answer to 2 decimal places. Circuit Masters Incorporated ( CMl ) is presently operating at 80% of capacity and manufacturing 113,000 units of a patented electronic component. The cost structure of the component is as follows: An italian firm has offered to purchase 21,500 of the components at a price of $31.50 per unit, FOB CMrs plant. The normal selling price is $36.50 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $28.90, so it is reluctant to accept this special ordet. 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. b. Is the cost calculation appropriate? c. Should the offer from the Italian firm be accepted

Answer & Explanation Solved by verified expert

See Answer