please complete everything Exercise 12-4 Evaluating a Special Order [LO12-4] cia
ID: 2480831 • Letter: P
Question
please complete everything
Exercise 12-4 Evaluating a Special Order [LO12-4] cial order for 23 handcrafted gold bracelets to be given as gifts to Imperial Jewelers is considering a speci members of a wedding party. The normal selling price of a gold bracelet is $409.00 and its unit product cost is $265.00 as shown below Direct materials Direct labor Manufacturing overhead $148 86 31 Unit product cost $ 265 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $11 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 $10 per bracelet and would also require acquisition of a special tool costing $468 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. Required What effect would accepting this order have on the company's net operating income if a special price of $369.00 per bracelet is offered for this order? (Enter all amounts as positive values.) Per Total 23 Unit Bracelets Incremental revenue Incremental costs: Variable costs Direct materials Direct labor Variable manufacturing overhead Special filigree Total variable cost Fixed costs Purchase of special tool Total incremental cost Incremental net operating income (loss)Explanation / Answer
Incremental profit on the special order is $ 2,154 calculated as under:
Special order should be accepted at this price.
Particulars Per Unit Total 23 bracelet Incremental Revenue 369 8,487 Incremental Costs: Variable Costs: Direct Material 148 Direct Labor 86 Variable manufacturing overhead 11 Special filigree 10 Total variable cost 255 5865 Fixed Costs Purchase of special tool 468 Total incremental costs 6333 Incremental net operating income (loss) 2,154Related Questions
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