Exercise 11-4 Special Order Decision (LO11-4] 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 $258.00 as shown below. $147 80 Direct materials Direct labor Manufacturing overhead Unit product cost $258 The members of a wedding party have approached Imperial Jewelers about buying 21 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 would require Imperial Jewelers to buy a special tool for $467 and that would increase the direct materials cost per bracelet by $4. 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, $5.00 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 finil the wodding 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? Complete this question by entering your answers in the tabs below. Chec The members of a wedding party have approached Imperial Jewelers about buying 21 of these gold bracelets for the discounted pri of $36100 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 $467 and that would increase the direct materials cost per bracelet by $4. 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, $5.00 of the overhead is variable with resp 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? 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? Required 2 > To analyze this special order opportunity, Imperial Jewelers has determined that most of its manufacturing overh unaffected by variations in how much jewelry is produced in any given period. However, $5.00 of the overhead to the number of bracelets produced. The company also believes that accepting this order would have no effect produce and sell jewelry to other customers. Furthermore, the company could fulfill the wedding party's order us 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Should the company accept the special order? OYes Ono Check c. What is the financial advantage (disadvantage) of closing the plant for the two- month period? d. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 86,000 Daks and ship them directly to Andretti's customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two- thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? Complete this question by entering your answers in the tabs below. Reg 1A Reg 18 Reg 2 Reg 3 Reg A to 40 Req 40 Reg 5 Assume that Andretti Company has sufficient capacity to produce 111,800 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 86,000 units each year it it were willing to increase the fixed selling expenses by $100,000. What is the financial advantage (disadvantage) of investing an additional $100,000 in fixed selling expenses? Show less Reg 10 > Ch c What is the financial advantage (disadvantage) of closing the plant for the two month perod? d. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 86,000 Daks and ship them directly to Andretti's customers. If Andretti Compar accepts this offer, the facilities that it uses to produce Daks would be idle, however, fixed manufacturing overhead costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only thirds of their present amount. What is Andrett's avoldable cost per unit that it should compare to the price quoted by the outside manufacturer? Complete this question by entering your answers in the tabs below. Reg 1A Req 18 Reg 2 Reg 3 Reg 4A to 40 Req 4D Regs Assume that Andretti Company has sufficient capacity to produce 111,800 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 86,000 units each year it it were willing to increase the fixed selling expenses by $100,000. Would the additional investment be justified? Yon ONO ded Homework i Saved Help Save & CH c. What is the financial advantage (disadvantage) of closing the plant for the two-month period? d. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 86,000 Daks and ship them directly to Andretti's customers. If Andretti Compa accepts this offer the facilities that it uses to produce Daks would be idle: however, fixed manufacturing overhead costs would be reduced by 30%, Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? Complete this question by entering your answers in the tabs below. Req1A Reg 18 Bang 2 Reg 3 Req 4A to 4C Reg 4D Reqs Assume again that Andretti Company has sufficient capacity to produce 111,800 Daks each year. A customer in a foreign market wants to purchase 25,800 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $3.70 per unit and an additional $20,640 for permits and licenses. The only selling costs that would be associated with the order would be $1.40 per unit shipping cost. What is the break-even price per unit on this order? (Round your answers to 2 decimal places.) Show less Break even price per unit Reg 10 Hog 3 > c. What is the financial advantage (disadvantage) of closing the plant for the two month period? d. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 86,000 Daks and ship them directly to Andretti's customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only tw thirds of their present amount. What is Andrett's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 Reghi Req 4A to 40 Reg 4D Reg 5 The company has 800 Daks on hand that have some irregularities and are therefore considered to be seconds." Due to the Irregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What is the unit cost figure that is relevant for setting a minimum selling price? (Round your answer to 2 decimal places.) Rotivant unit cost per unit Ches Complete this question by entering your answers in the tabs below. Req 1A Req 18 Reg 2 Reg 3 Req 4A to 4C Req 40 Reg 5 Due to a strike in its supplier's plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 30% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two month period. (Round number of units produced to the nearest whole number Round your intermediate calculations and final answers to 2 decimal places, Any losses/reductions should be indicated by a minus sign.) a. How much total contribution margin will Andretti forgo if it closes the plant for two months? b. How much total fixed cost will the company avoid if it closes the plant for two months? c. What is the financial advantage (disadvantage) of closing the plant for the two-month period? Show less Forgone contribution margin Total avoidable fixed costs Financial advantage (disadvantage) Chi u VI ER esenom VOL 13 Meus OVUTUQUID cupet VOCI SHULU LUPIE W WIE price yuvitu vye LSIC manufacturer? Complete this question by entering your answers in the tabs below. Req IA Reg 18 Reg 2 Reg 3 Reg 4A to 40 Reg 4D Reg 5 Due to a strike in its supplier's plant, Andretti Company is unable to purchade more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 30% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two month period. Should Andretti close the plant for two months? Show less Oros ONO Roq AA to 4C Regs > ded Homework Saved Help Save & Ex Che reduced by 30%. because the outside manuacturer would pay for a shipping cost, the variable sening expenses would be only thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? Complete this question by entering your answers in the tabs below. Tregs Req1A Reg 18 Reg 2 Reg 3 13 Req 4A to 40 Reg 4D Reg 5 An outside manufacturer has offered to produce 86,000 Daks and ship them directly to Andretti's customers. If Andretti Company accepts this offer the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two-thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? (Do not round Intermediate calculations. Round your answers to 2 decimal places. Show less Avoidable cost per unit Reg 40