Imperial Jewelers manufactures and sells a gold bracelet for $407.00. The company's accounting system says that the unit product cost for this bracelet is $264.00 as shown below:
Direct materials | $141 |
Direct labor | 87 |
Manufacturing overhead | 36 |
Unit product cost | $264 |
The members of a wedding party have approached Imperial Jewelers about buying 20 of these gold bracelets for the discounted price of $367.00 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 $458 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.
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 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?
Special order revenue = 20*367 = 7340
Cost of making
= (141+13+87+14)*20 + 458 = 5558
Financial advantage
= 7340 - 5558
Financial advantage = 1782
Yes
Imperial Jewelers manufactures and sells a gold bracelet for $407.00
Exercise 12-4 Special Order Decision (LO12-4) Imperial Jewelers manufactures and sells a gold bracelet for $407.00. The company's accounting system says that the unit product cost for this bracelet is $260.00 as shown below: $142 87 Direct materials Direct labor Manufacturing overhead Unit product cost 31 $260 The members of a wedding party have approached Imperial Jewelers about buying 26 of these gold bracelets for the discounted price of $367.00 each. The members of the wedding party would like special...
Imperial Jewelers manufactures and sells a gold bracelet for $407.00. The company’s accounting system says that the unit product cost for this bracelet is $267.00 as shown below: Direct materials $ 149 Direct labor 82 Manufacturing overhead 36 Unit product cost $ 267 The members of a wedding party have approached Imperial Jewelers about buying 23 of these gold bracelets for the discounted price of $367.00 each. The members of the wedding party would like special filigree applied to the...
Imperial Jewelers manufactures and sells a gold bracelet for $407.00. The company’s accounting system says that the unit product cost for this bracelet is $271.00 as shown below: Direct materials $ 150 Direct labor 87 Manufacturing overhead 34 Unit product cost $ 271 The members of a wedding party have approached Imperial Jewelers about buying 18 of these gold bracelets for the discounted price of $367.00 each. The members of the wedding party would like special filigree applied to the...
Imperial Jewelers manufactures and sells a gold bracelet for $407.00. The company’s accounting system says that the unit product cost for this bracelet is $266.00 as shown below: Direct materials $ 147 Direct labor 87 Manufacturing overhead 32 Unit product cost $ 266 The members of a wedding party have approached Imperial Jewelers about buying 16 of these gold bracelets for the discounted price of $367.00 each. The members of the wedding party would like special filigree applied to the...
Imperial Jewelers manufactures and sells a gold bracelet for $407.00. The company's accounting system says that the unit product cost for this bracelet is $263.00 as shown below: $ 142 85 Direct materials Direct labor Manufacturing overhead Unit product cost 36 $ 263 The members of a wedding party have approached Imperial Jewelers about buying 28 of these gold bracelets for the discounted price of $367.00 each. The members of the wedding party would like special filigree applied to the...
Imperial Jewelers manufactures and sells a gold bracelet for $407.00. The company's accounting system says that the unit product cost for this bracelet is $267.00 as shown below: Direct materials Direct labor Manufacturing overhead Unit product cost $142 89 36 $267 The members of a wedding party have approached Imperial Jewelers about buying 29 of these gold bracelets for the discounted price of $367.00 each. The members of the wedding party would like special filigree applied to the bracelets that...
Imperial Jewelers manufactures and sells a gold bracelet for $401.00. The company's accounting system says that the unit product cost for this bracelet is $263.00 as shown below Direct materials $146 Direct labor 81 Manufacturing overhead 36 $263 Unit product cost The members of a wedding party have approached Imperial Jewelers about buying 27 of these gold bracelets for the discounted price of $361.00 each. The members of the wedding party would like special filigree applied to the bracelets that...
Imperial Jewelers manufactures and sells a gold bracelet for $406.00. The company’s accounting system says that the unit product cost for this bracelet is $256.00 as shown below: Direct materials $ 146 Direct labor 80 Manufacturing overhead 30 Unit product cost $ 256 The members of a wedding party have approached Imperial Jewelers about buying 16 of these gold bracelets for the discounted price of $366.00 each. The members of the wedding party would like special filigree applied to the...
Imperial Jewelers manufactures and sells a gold bracelet for $405.00. The company's accounting system says that the unit product cost for this bracelet is $255.00 as shown below: Direct materials Direct labor Manufacturing overhead Unit product cost $143 80 32 $255 The members of a wedding party have approached Imperial Jewelers about buying 24 of these gold bracelets for the discounted price of $365.00 each. The members of the wedding party would like special filigree applied to the bracelets that...
Imperial Jewelers manufactures and sells a gold bracelet for $403.00. The company’s accounting system says that the unit product cost for this bracelet is $264.00 as shown below: Direct materials $ 141 Direct labor 83 Manufacturing overhead 40 Unit product cost $ 264 The members of a wedding party have approached Imperial Jewelers about buying 22 of these gold bracelets for the discounted price of $363.00 each. The members of the wedding party would like special filigree applied to the...