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Sived Help Save & 8 CH Imperial Jewelers manufactures and sells a gold bracelet for $402.00. The company's accounting system says that the unit product cost for this bracelet is $269.00 as shown below. 2.5 points Direct materials Direct labor Manufacturing overhead Unit product cost Skipped $149 84 36 $269 took Hint The members of a wedding party have approached Imperial Jewelers about buying 11 of these gold bracelets for the discounted price of $362.00 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 $461 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 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? Files Print References Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of accepting the special order from the wedding party? Financial advantage Mic Gew < Prev 8 of 10 Next >

Answer 1

Answer to Part a: Per Unit 362.00 Total For 11 Braceltes 3982.00 Incremental Revenue Incremental Costs: Variable Costs: Direct Materials Direct Labor Variable Manufacturing Overhead Special Filigree Total Variable Costs Fixed Cost: Purchase of Special Tool Total Incremetal Costs Incremental Net Operating Income 149.00 84.00 14.00 13.00 260.00 1639.00 924.00 154.00 143.00 2860.00 461.00 3321.00 661.00 Net Operating Income increases by $661.00 Answer to Part b: The Special Order should be accepted as it would increase Net Operating Income, ven though the Special Price of the order is less than the Normal Price.