#11 (ch12) Sato Jewellers has had a request for a special order for 10 gold bang

Question

#11 (ch12) Sato Jewellers has had a request for a special order for 10 gold bangles for the members of a wedding party. The normal selling price of a gold bangle is $270.00 and its unit product cost is $180.00, as shown below $100.00 60.00 Manufacturing overhead 20.00 Direct labour Unit product cost $180.00 Most of the manufacturing o in any given period. However, $5 of the overhead is variable, depending on the number of bangles produced. The customer would like special filigree applied to the bangles. This filigree would require additional materials costing $4 per bangle and would also require acquisition of a special tool costing $300 that would have no other use once the special order was completed. This order would have no effect on the company's regular sales, and the order could be filled using the company's existing capacity without affecting any other order. verhead is fixed and unaffected by variations in how much jewellery is produced Required $240.00 is offered per bangle for this order? (Do not round intermediate calculations. Round your answer to 2 decimal places.) No

Explanation / Answer

Incremental revenue 2400 Incremental costs: Direct materials 1000 Direct labour 600 Variable manufacturing overhead 50 Special filgree 40 Special tool 300 Total Incremental costs 1990 Incremental income(loss) 410 Net operating income increases by $410 b Yes

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