Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 $389.95 and its unit product cost is $264.00 as shown below:

Direct materials $143

Direct labour 86

Manufacturing overhead 35

Unit product cost $264

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

(a) What effect would accepting this order have on the company's net operating income if a special price of $349.95 is offered per bracelet for this order? Should the special order be accepted at this price?

(b) Assume Miyamoto Jewelers is currently operating at its maximum capacity, should the special order in part (a) be accepted?

(c) Identify two qualitative factors that Miyamoto Jewelers should consider prior to making a final decision regarding whether to accept the special order

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Applications Of Accounting Information Systems

Authors: David M. Shapiro

1st Edition

194999158X, 9781949991581

More Books

Students also viewed these Accounting questions

Question

d. In what sports does the person consult?

Answered: 1 week ago