Accept special sales order? Circuit Masters Inc. (CMI) is presently operating at 80% of capacity and manufacturing 120,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead Fixed overhead $ Required: a. Show how management came up with a cost of $24 per unit for this component. b. Evaluate this cost calculation. Explain why it is or is not appropriate. c. Should the offer from the Italian firm be accepted? Why or why not? 6.00 per unit 6.00 per unit 8.00 per unit $480,000 per year An Italian firm has offered to purchase 20,000 of the components at a price of $24 per unit, FOB CMI's plant. The normal selling price is $32 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $24, so it is reluctant to accept this special order.

Accept special sales order? Circuit Masters Inc. (CMI) is presently operating at 80% of capacity and manufacturing 120,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead Fixed overhead $ Required: a. Show how management came up with a cost of $24 per unit for this component. b. Evaluate this cost calculation. Explain why it is or is not appropriate. c. Should the offer from the Italian firm be accepted? Why or why not? 6.00 per unit 6.00 per unit 8.00 per unit $480,000 per year An Italian firm has offered to purchase 20,000 of the components at a price of $24 per unit, FOB CMI's plant. The normal selling price is $32 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $24, so it is reluctant to accept this special order.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

What are reversing entries, and how do they work?
What are some true statements regarding the use of a worksheet?
Adjusting entries and error example
Read and interpret abalance sheet.
What do the letter FIFO Stand for?
What exactly are reversing entries, and why do they exist?
what is posting system in detail ?
Briefly discuss the nature of Single entry and double entry system.
Please do not give answer in image formate
What goes in what, like what do I put on Collum a,b,c, etc I'm confused where to put the data
What information is required in a proxy statement?
What is indirect quotation.Explain with example