Sato Jewellers has had a request for a special order for 10 gold bangles for the members of a wedding party. The normal selling price of a gold bangle is $389.95 and its unit product cost is $264.00, as shown below: Direct materials Direct labour Manufacturing overhead $143.00 86.00 35.00 Unit product cost $264.00 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewellery is produced in any given period. However, $7 of the overhead is variable, depending on the number of bangles produced. The customer would like special filigree applied to the bangles. This filigree would require additional materials costing $6 per bangle and would also require acquisition of a special tool costing $465 that would have no other use once the special order was completed. This order would have no effect on the company's regular sales, and the order could be filled using the company's existing capacity without affecting any other order Required: a. What effect would accepting this order have on the company's operating income if a special price of $349.95 is offered per bangle for this order? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Net operating income by b. Should the special order be accepted at this price? Yes No Outdoor Luggage Inc. makes high-end, hard-sided luggage for sports equipment. Data concerning three of the company's most popular models appear below. Ski Guard Golf Guard $320 $130 $320 $2 $210 Selling price per unit Variable cost per unit Plastic injection moulding machine processing time required per unit Kgs of plastic pellets per unit 10 min 13 min 12 kg 7 kg Required: 1a. The total time available on the plastic injection moulding machine is the constraint in the production process. What is the contribution margin per unit of the constrained resources for Ski Guard, Golf Guard and Fishing Guard? Ski Guard Selling price per unit Variable cost per unit Contribution margin per unit Plastic injection molding machine processing time required to produce one unit Contribution margin per unit of the constrained resource minutes per minute 16. Which product would be the most profitable use of this constraint? Fishing Guard Ski Guard Golf Guard 10. Which product would be the least profitable use of this constraint? Fishing Guard Ski Guard Golf Guard 2a. A severe shortage of plastic pellets has required the company to cut back its production so much that the plastic injection moulding machine is no longer the bottleneck. Instead, the constraint is the total available kilograms of plastic pellets. What is the contribution margin per unit of the constrained resources for Ski Guard, Golf Guard and Fishing Guard? Ski Guard Golf Guard Fishing Guard Selling price per unit Variable cost per unit Contribution margin per unit Kgs of plastic pellets required to produce one unit Contribution margin per unit of the constrained resource kgs kos kgs per kg per kg per kg 2b. Which product would be the most profitable use of this constraint? O Golf Guard O Fishing Guard Ski Guard 2c. Which product would be the least profitable use of this constraint? Golf Guard Fishing Guard Ski Guard 3. Which product has the largest unit contribution margin? Ski Guard O Fishing Guard Golf Guard
