HW Ch10 eztomheducation.con. a Search instructions i ncip Question 2 (of 5) Save

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HW Ch10 eztomheducation.con. a Search instructions i ncip Question 2 (of 5) Save & FxitSubmit valuc: 20.00 points Imperial Jewelers is considering a special order for 28 handcrafted gold bracelets 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 $258.00 as shown below: Direct materials Direct labor Manufacturing overhead S141 81 36 Unit product cost $ 258 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $15 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 S14 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. Required: 1. What effect would accepting this order have on the company's net operating income if a special price of $362.00 per bracelet is offered for this order? (Enter all amounts as positive values.) Per Total 28 Unit Bracelets Incremental revenue Incremental costs Variable costs: Direct materials Direct labor Variable manufacturing overhead Special filigree Total variable cost Fixed costs Purchase of special tool Total incremental cost Incremental net operating income (loss) 2. Should the special order be accepted at this price? O Yes No Hints References eBook & Resources » 2:59 PM Desktop ^ (x 12/1/2017 5

Explanation / Answer

Answer =1 CALCULATION OF THE NET OPERATING INCOME WITH A SPECIAL PRICE OF $ 362 Per unit Cost Total for 28 Bracelets Increamental Revenue $362 $10,136 Less: Increamental Cost Variable Costs: Direct Materials $141 $3,948 Direct Labours $81 $2,268 Variable Manufacturing Overhead $15 $420 Special Filigree $14 $392 Total Varaible Cost (A) $7,028 Fixed Cost (B) $467 Total Increamental Cost =(A + B) $7,495 Profit (Increamental revenue- increamental cost) $2,641 Answer =2 Special Order be accepted at this price =         Yes

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