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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
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 $423.00 and its unit product cost is $282.00, as shown below: Direct materials Direct labour Manufacturing overhead $154.00 96.00 32.00 Unit product cost $282.00 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewellery is produced in any given period. However, $8 of the overhead is variable, depending on the number of bangles produced. The cus omer would like special filigree applied to the bangles. This filigree would require additional materials costing $7 per bangle and would also require acquisition of a special tool costing $570 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 $378.00 is offered per bangle for this order? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Net operating income increased by Check A firm makes two products: frying pans and saucepans. Frying pans sell for $33 each and saucepans sell for $23 each. The variable cost of making a frying pan is $21.5, and the variable cost of making saucepans is $8.3. The firm has additional manufacturing costs of $1.3 million. Required: 1. If the firm sells 100 more saucepans, what is the additional profit to the firm? Additional profit Check Hart Company sells and delivers office furniture across Western Canada. The costs associated with the acquisition and annual operation of a delivery truck are given below: Insurance Licences Taxes (vehicle) Garage rent for parking (per truck) Depreciation ($20,000 = 5 years) Gasoline, oil, tires, and repairs $ 750 $ 150 $ 100 $ 1,000 $ 4,000 $0.99/km Required: 1. Assume that Hart Company owns one truck that has been driven 60,000 kilometres during the first year. Compute the average cost per kilometre of owning and operating the truck. (Round your answer to 2 decimal places.) Average cost per kilometre 3. Assume that the company decides to use the truck during the second year. Near year-end, an order is received from a customer over 1,000 kilometres away. What costs from the previous list are relevant in a decision between using the truck to make the delivery and having the delivery done commercially? (Round your answer to 2 decimal places.) Relevant cost per kilometre 4. Occasionally, the company could use two trucks at the same time. For this reason, some thought is being given to purchasing a second truck. The total kilometres driven would be the same as if only one truck were owned. What costs from the previous list are relevant to a decision about whether to purchase the second truck? Relevant cost
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