ezto.mheducation.com/hm.tpx Imperial Jewelers is considering a special order for

Question

ezto.mheducation.com/hm.tpx Imperial Jewelers is considering a special order for 18 handarafted gold braceles to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $402.00 and its unit product cost is $253.00 as shown below Direct materials Direct labor Manufacturing overhead $143 80 30 Unit product cost $253 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $7 of the overhead is variable with respedt to the number of bracelets produced. The austomer who is interested in the special bracelet order would like special filigree applied to the bracelets. This filigree would require additional materials costing S8 per bracelet and would also require aoquisition of a special tool costing $488 that would have no other use once the s regular sales and the order could be fulfilled using the company's existing capacity without affecting any other order Required: 1, what effe would a…pting this order have on the oompany's net operating of $382 00 per bracelet is offered for this order? lEnter all amounts as pos income if a special price Per Total 16 Unit Incremental revenue Incremental costs: Variable costs: Direct materials Direct labor Variable manufacturing overhead Special filigre Total variable cost Fixed costs Purchase of special tool Total incremental cost Incrementsl net opersting inoome tloss) Type here to search SHIBA

Explanation / Answer

Solution:-

Net operating income increase by

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Per unit Total 16 Bracelets Incremental revenue 362.00 5,792.00 Incremental cost: Variable cost: Direct materials 143.00 2,288.00 Direct labor 80.00 1,280.00 Variable manufacturing overhead 7.00 112.00 Special filigree 6.00 96.00 Total variable cost 236..00 3,776.00 Fixed costs Purchase of special cost 466.00 Total incremental cost 4,242.00 Incremental net income / (loss) 1,550.00

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