EXERCISE $12-4$ Evaluating a Special Order $[$L$04]$

Miyamoto 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 $$389\mathrm{.}95$ and its

unit product cost is $$264\mathrm{.}00$ as shown below:

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

produced in any given period. However, $$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 $$6$ per bracelet

and would also require acquisition of a special tool costing $$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:

What effect would accepting this order have on the company's net operating income if a special price

of $$349\mathrm{.}95$ is offered per bracelet for this order? Should the special order be accepted at this price?