Imperial Jewelers is considering a special order for 25 handcrafted gold bracele

Question

Imperial Jewelers is considering a special order for 25 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $405.00 and its unit product cost is $268.00 as shown below: Direct materials Direct labor Manufacturing overhead $ 147 82 39 Unit product cost $268 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $9 of the overhead is variable with respect to the number of bracelets produced. The customer who is interested in the special bracelet order would like special filigree applied to the bracelets. This filigree would require additional materials costing $8 per bracelet and would also require acquisition of a special tool costing $462 that would have no other use once the special order is completed This order would have no effect on the company's regular sales and the order could be fulfilled using the company's existing capacity without affecting any other order.

Explanation / Answer

Per Total 25 unit Bracelets Incremental Revenue             365          9,125 Incremental Cost Variable Cost Direct material             147          3,675 Direct Labour                 -   Variable Manufactring Overhead                 9             225 Specila Filligire                 8             200 Total Variable Cost          4,100 Fixed Cost                 -   Purchase of Special Tool             462 Total Incremental Cost          4,562 Incremental Net operating income/(loss)          4,563

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.