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Exercise 12-4 Evaluating a Special Order [LO12-4] Imperial Jewelers is considering a special order for 19 handcrafted gold bracelets to be given as gifts to
Exercise 12-4 Evaluating a Special Order [LO12-4] Imperial Jewelers is considering a special order for 19 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal seling price of a gold bracelet is 5405.00 and its unit product cost is $268.00 as shown below Direct materials Direct labor 5148 84 34 Unit product cost 5 286 Most of the manufacturing overhead is foxed and unaffected by variations in how much jewery is produced in any given period. However, 9 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 58 per bracelat and would also require acquisition of a special tool costing $450 that would have no other use onoe 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 5365.00 per bracelet is offered for this order? (Enter al amounts as positive values.) Unit Bracelets Incremental revenue Incremental costs Variable costs: Direct materials Direct labor Variable manufacturing overhead Special filigree Total variable cost Fixed costs Purchase of special tool Total incremental cost Incremental net operating income (loss) Should the special order be accepted at this price? O Yes O No
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