Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Sparkle Company manufactures affordable costume jewelry. At the beginning of the year, the Sparkle Company received a request from an oversees customer who would

image text in transcribed
image text in transcribed
The Sparkle Company manufactures affordable costume jewelry. At the beginning of the year, the Sparkle Company received a request from an oversees customer who would like to purchase 10,000 necklaces for a Breast Cancer Fund Raising event; due to the large order the customer has offered to purchase each necklace for $80 (current selling price is $150 per unit). If the Sparkle Company accepts the special order, then an additional $10,000 in shipping costs and $20,000 in custom packaging/wrapping will be incurred. In addition, the order will require each necklace have special engraving that will cost $3 per necklace. If the special order is accepted, only the $2 of fixed overhead will be relevant as this will cover the supervisor salary. The remaining fixed costs will be incurred with or without the special order. The company currently has the capacity to produce the 10,000 necklaces without incurring any additional fixed costs for factory space. Current Price Structure for each necklace (excludes special order) Direct Labor.. $10 Direct Materials. $60 Fixed Cost per unit (includes $2 per unit for the supervisor). 10 Sales Commission. $3 Total cost per Unit. $83 Which of the following is true if the Sparkle Company accepts the special order? Which of the following is true if the Sparkle Company accepts the special order? a) the company would incur a $70,000 loss if they accept the special order b) the company would report a $20,000 profit if they accept the special order c) the company would report a $50,000 profit if they accept the special order d) the company would incur a $30,000 loss if they accept the special order e) the company should not accept the special order because the offer price is less than the regular selling price

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

Financial ACCT2

Authors: Norman H. Godwin, C. Wayne Alderman

2nd edition

9781285632544, 1111530769, 1285632540, 978-1111530761

More Books

Students also viewed these Accounting questions