Should the offer from the italian firm be accepted

Assignment Help Accounting Basics
Reference no: EM13515594

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

$ 6.00 per unit

Direct labor

6.00 per unit

Variable overhead

8.00 per unit

Fixed overhead

$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.

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?

Reference no: EM13515594

Questions Cloud

Calculate a labor efficiency variance expressed : Calculate the number of workers that should have been available to process July claims - calculate a labor efficiency variance expressed as both a number of workers and a dollar amount for the month.
How to compute the concentration of cu in the chloroform : Calculate the concentration of Cu in the chloroform phase if 39 mL of a 0.28 M aqueous Cu solution buffered to pH 4 is equilibrated with 12 mL of chloroform.
Basic option strategies : If a person writes a covered call with a striking price of $45 and receives $3 in premium, exercise will occur if the stock price is above ___ on expiration day.
Calculate the rate of return on the investment : Calculate the rate of return on the investment based on the financial statement impacts of the investment.
Should the offer from the italian firm be accepted : Show how management came up with a cost of $24 per unit for this component - evaluate this cost calculation. Explain why it is or is not appropriate.
Define the ph before and after the addition of nh4no3 : Calculate the pH of 100. mL of 0.28 M NH3 before and after the addition of 4.5 g of NH4NO3, and account for the change. Assume that the volume remains constant. What is the pH before and after the addition of NH4NO3
Identify the relevant costs to make this part internally : Identify the relevant costs to make this part internally and should Sycamore produce the part or continue to buy it from the outside supplier?
What volume spilled if mercury has a density of 13.6 : A thermometer containing 9.5 of mercury has broken. If mercury has a density of 13.6 , what volume spilled
Analysis and prioritization of unit objectives : Analysis and prioritization of unit objectives without reference to prior period budget allowances.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Prepare a process costing analysis for the month of july

Data for the Darth Vader Manufacturing Company for the month of July 2005 are as follows: Prepare a process costing analysis for the month of July.

  The towson manufacturing corporation applies overhead on

the towson manufacturing corporation applies overhead on the basis of machine hours. the following divisional

  What types of industries have unearned revenue why is

what types of industries have unearned revenue?why is unearned revenue considered a liability?when is the unearned

  Sin tax on cigarettes and alcohol

Please help with writing a research paper that examines an issue of current relevance to public policymaking.

  Partner in the kkm partnership

Tom is a 40% partner in the KKM Partnership. During the current year, KKM reported gross receipts of 160,000 and a charitable contribution of 10,0000.

  Difference between audit and auditing

Define auditing, what is the difference between audit and auditing? Explain the important techniques of auditing. Explain the various classification of audit, list the type of information necessary for conducting an audit.

  Influences of competitors-costs-customers

Major influences of competitors, costs, and customers on pricing decisions are factors of: (a) supply and demand (b) activity-based costing and activity-based management

  Financial factors of management

What financial factors should management consider when deciding whether to sell a product at the split off point or process it further?

  Question 1nbspa companys warehouse was destroyed by a

question 1nbspa companys warehouse was destroyed by a tornado on march 15. the following information was the only

  Distinguish between a capital and an operating expenditure

distinguish between a capital expenditure and an operating expenditure. explain why a company might want to capitalized expenditures rater than expense them. what impact would such a decision have on its financial statement?

  Basic earnings per share of flyaway travel company

Flyaway Travel Company reported net income for 2009 in the amount of $90,000. During 2009, Flyaway declared and paid $2,125 in cash dividends on its nonconvertible preferred stock.

  Accounts receivable-bad debt journal entries

Prepare example journal entries to account for transactions related to accounts receivable and bad debt using both percentage of sales and the percentage of receivables methods.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd