$ 84.00 Direct materials... Direct labor..... Manufacturing overhead Unit product cost.. 45.00 20.00 $149.00
Special Order Decision
Imperial Jewelers manufactures and sells a gold bracelet for $189.95. The company’s accounting system says that the unit product cost for this bracket is $149.00 as shown below:
The members of a wedding party have approached Imperial Jewelers about buying 20 of these gold bracelets for the discounted price of $169.95 each. The members of the wedding party would like special filigree applied to the bracelets that would require Imperial Jewelers to buy a special tool for $250 and that would increase the direct materials cost per bracelet by $2.00. The special tool would have no other use once the special order is completed.
To analyze this special order opportunity, Imperial Jewelers has determined that most of its manufacturing
Required:
1. What is the financial advantage (disadvantage) of accepting the special order from the wedding party?
2. Should the company accept the special order?
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