Imperial Jewelers is considering a special order for 18 handcrafted gold bracele
ID: 2536014 • Letter: I
Question
Imperial Jewelers is considering a special order for 18 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 $256.00 as shown below:
Imperial Jewelers is considering a special order for 18 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 $256.00 as shown below:
Imperial Jewelers is considering a special order for 18 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is S405.00 and its unit product cost is $256.00 as shown below: Direct materials Direct labor Manufacturing overhead 140 84 32 Unit product cost $ 256 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 $467 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 unit Total 18 bracelets Incremental revenue 365 6570 Incremental costs: Variable costs: Direct materials 140 2520 Direct labor 84 1512 Variable manufacturing overhead 9 162 Special filgree 8 144 Total variable cost 241 4338 Fixed costs: Purchase of special tool 467 Total Incremental costs 4805 Incremental net operating income(loss) 1765 2 Yes
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