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Imperial Jewelers manufactures and sells a gold bracelet for $ 4 0 1 . 0 0 . The company's accounting system says the unit product
Imperial Jewelers manufactures and sells a gold bracelet for $ The company's accounting system says the unit product cost for this bracelet is $ as shown below: A wedding party has approached Imperial Jewelers about buying gold bracelets for the discounted price of $ each. The wedding party would like special filigree applied to the bracelets that would increase the direct materials cost per bracelet by $ Imperial Jewelers would have to buy a special tool for $ to apply the filigree to the bracelets. The special tool would have no other use once the special order is completed. To analyze this special order, Imperial Jewelers determined most of its manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $ of the overhead is variable with respect to the number of bracelets produced. The company also believes 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 existing manufacturing capacity. Required: What is the financial advantage disadvantage of accepting the wedding party's special order? Should the company accept the special order?
Imperial Jewelers manufactures and sells a gold bracelet for $ The company's accounting
system says the unit product cost for this bracelet is $ as shown below:
A wedding party has approached Imperial Jewelers about buying gold bracelets for the
discounted price of $ each. The wedding party would like special filigree applied to the
bracelets that would increase the direct materials cost per bracelet by $ Imperial Jewelers would
have to buy a special tool for $ to apply the filigree to the bracelets. The special tool would have
no other use once the special order is completed.
To analyze this special order, Imperial Jewelers determined most of its manufacturing overhead is
fixed and unaffected by variations in how much jewelry is produced in any given period. However,
$ of the overhead is variable with respect to the number of bracelets produced. The company
also believes 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 existing
manufacturing capacity.
Required:
What is the financial advantage disadvantage of accepting the wedding party's special order?
Should the company accept the special order?
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