Imperial Jewelers is considering a special order for 15 handcrafted gold bracele

Question

Imperial Jewelers is considering a special order for 15 handcrafted gold bracelets to be given as gifts to members of a wedding party The normal selling price of a gold bracelet is $401 00 and its unit product cost is $269 00 as shown below Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period However $6 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 addhional materials costing $5 per bracelet and would also require acquisition of a special tool costing $457 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 h

Explanation / Answer

The filled table:

since there is a net profit from the order the company can accept the order.

Per Total 15 Unit Bracelets Incremental revenue: $361 $5415 Incremental Cost: Varriable Cost: Direct Materials: $148 $2220 Direct labour: $86 $1290 Variable Manufacturing Overhead: [$29 + $6] = $35 [$29 + ($6 x 35)] =$239 Special Filligree: $5 $75 Total Variable Cost: $274 $3824 Fixed Costs: Purchase of special tool: $457 Total Incremental Cost: $4281 Incremental Net Operating Income: [$5415 - $ $4281] = $1134

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

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