Case $2(1\mathrm{.}5$ points$)$

A Saudi Jewelers is considering a special order for $10$ handcrafted gold bracelets to be

given as gifts to members of a wedding party. The normal selling price of a gold bracelet

is SR$389\mathrm{.}95$ and its unit product cost is SR$264\mathrm{.}00$ as shown below

Direct materials $...$SR$143\mathrm{.}00$

Direct labor $...$ SR$86\mathrm{.}00$

Manufacturing overhead... SR$35\mathrm{.}00$

Unit product cost $...$SR$264\mathrm{.}00$

Most of the manufacturing overhead is fixed and unaffected by variations in how much

jewelry is produced in any given period. However, SR$7$ 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 SR$6$ per bracelet and would also require

acquisition of a special tool costing SR$465$ 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

Refer to the special$-$order decision tree and explain the case $(0\mathrm{.}25$ point$).$

Using the relevant cost approach, what effect would be accepting this order have

on the company if a special price of SR$349\mathrm{.}95$ is offered per bracelet for this order

point