Imperial Jewelers manufactures and sells a gold bracelet for $$404\mathrm{.}00.$ The

company's accounting system says the unit product cost for this bracelet is

$$260\mathrm{.}00,$ as shown below:

A wedding party has approached Imperial Jewelers about buying $22$ gold bracelets

for the discounted price of $$364\mathrm{.}00$ each. The wedding party would like special

filigree applied to the bracelets that would increase the direct materials cost per

bracelet by $$10.$ Imperial Jewelers would have to buy a special tool for $$457$ 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, $$11\mathrm{.}00$ 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?

Complete this question by entering your answers in the tabs below.

What is the financial advantage $($disadvantage$)$ of accepting the wedding party's special order?