3 cost for this bracelet is $268.00 as shown below $149 points Dnit product cost
ID: 2523547 • Letter: 3
Question
3 cost for this bracelet is $268.00 as shown below $149 points Dnit product cost$269 eBookThe The members of a wedding party have approached Imperial Jewelers about buying 15 of these gold bracelets for the discounted price to the bracelets that would r Jewelers to buy a special tool for $457 and that would increase the direct materials cost per bracelet by $4. The special tool would have no other use once the special order is completed. Imperial Jewelers has determined that most of its manufacturing To unaffected by variations in how much jewelry is produced in any given period. However, $5.00 of the overhead is variable with respect to the number of bracelets produced. The company also believes that accepting this order would have no effect on its ability to produce and sell jewelry to other customers. Furthermore, the company could fulfill the wedding party's order using its existing is fixed and capacity. h s the tnancial advantage (disadvantag) of acceping the special order from the wedling party? 2. Should the company accept the special order? e) of accepting the special order from the wedding party?Explanation / Answer
Requirement 1:
Particulars
Amount ($)
Direct material cost (149+4)
153
Direct labour
89
Manufacturing overhead (Only variable part is relevant)
5
Total relevant cost per unit
247
Total expenditures on 15 additional units of special order (15 x 247)
3705
Add: Special tool cost
457
Total cost of 15units
4162
Unit price for special order of 15 (362 x 15)
5430
Less: Total cost of special order
4162
Financial advantage of special order (5430 - 4162)
1268
Requirement 2:
Since, Imperial Jewellers will be able gain financial advantage from the special order of 15 bracelets even if sold at discounted price of $362 each thus, the special order should be accepted. The acceptance of special order will yield a financial advantage of $1,268 as can be seen from the above table.
Thus, the special order should be accepted.
Particulars
Amount ($)
Direct material cost (149+4)
153
Direct labour
89
Manufacturing overhead (Only variable part is relevant)
5
Total relevant cost per unit
247
Total expenditures on 15 additional units of special order (15 x 247)
3705
Add: Special tool cost
457
Total cost of 15units
4162
Unit price for special order of 15 (362 x 15)
5430
Less: Total cost of special order
4162
Financial advantage of special order (5430 - 4162)
1268
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