Exercise 12-4 (5pt) 6 Help Save & Exit Submit Saved Check my work Imperial Jewel

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Exercise 12-4 (5pt) 6 Help Save & Exit Submit Saved Check my work Imperial Jewelers manufactures and sells a gold bracelet for $400.00. The company's accounting system says that the unit product cost for this bracelet is $26700 as shown below: 5 points Direct materials Direct labor Manufacturing overhead Unit product cost $149 82 36 $267 Skipped The members of a wedding party have approached Imperial Jewelers about buying 27 of these gold bracelets for the discounted price of $360.00 each. The members of the wedding party would like special filigree applied to the bracelets that would require Imperial Jewelers to buy a special tool for $453 and that would increase the direct materials cost per bracelet by $13. The special tool would have no other use once the special order is completed. eBook Hint To analyze this special order opportunity, Imperial Jewelers has determined that most of its manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $14.00 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 Print to produce and sell jewelry to other customers. Furthermore, the company could fulfill the wedding party's order using its existing manufacturing capacity. Required 1. What is the financial advantage (disadvantage) of accepting the special order from the wedding party? 2. Should the company accept the special order? References Complete this question by entering your answers in the tabs below Required Required 2 What is the financial advantage (disadvantage) of accepting the special order from the wedding party? Required 1 Required 2 > Graw Hill Prev of 1l Next

Explanation / Answer

Per unit Total 27 bracelets Incremental revenue 360 9720 Incremental costs: Variable costs: Direct materials 149 4023 Direct labor 82 2214 Variable manufacturing overhead 14 378 Special filgree 13 351 Total variable cost 258 6966 Fixed costs: Purchase of special tool 453 Total Incremental costs 7419 Incremental net operating income(loss) 2301 Financial advantage $2301

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