Imperial jewelers is considering a special order for 20

Reference no: EM13606240

Imperial Jewelers is considering a special order for 20 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $189.95 and its unit product cost is $149.00 as shown below:

Direct materials $84.00
Direct labor 45.00
Manufacturing overhead 20.00
Unit product cost $149.00

Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $4.00 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 $2.00 per bracelet and would also require acquisition of a special tool costing $250 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 $169.95 per bracelet is offered for this order? (Input the amount as positive value. Omit the "tiny_mce_markerquot; sign in your response.)Net operating income increased by $ ?

(b) Should the special order be accepted at this price? Yes or No?

Reference no: EM13606240

Questions Cloud

Allocation and fixed costs herrestad company does produce : slp 2 allocation and fixed costs herrestad company does produce and sell two products and the details below will be

A certain car is capable of accelerating at a rate of 059 : a certain car is capable of accelerating at a rate of 0.59 ms2. how long does it take for this car to go from a speed

Users of financial statements rely on the information : users of financial statements rely on the information available to them to decide whether to invest in a company or

If you require an effective annual interest rate not a : you are considering a 30-year 1000 par value bond. its coupon rate is 11 and interest is paid semiannually. if you

Imperial jewelers is considering a special order for 20 : imperial jewelers is considering a special order for 20 handcrafted gold bracelets to be given as gifts to members of a

Perform the following experiment the purpose of this : perform the following experiment the purpose of this experiment is to use a compass to detect the weak magnetic field

A particle moves along a vertical straight line with an : a particle moves along a vertical straight line with an acceleration of a 4v34 when t1 sec. its displacement x 10 ft

Website visitors are often loath to disclose personal : website visitors are often loath to disclose personal information when making a purchase on the internet. despite

The auto parts department of an automotive dealership sends : the auto parts department of an automotive dealership sends out an average of 8 special orders daily. the number of

User Account

All Pages