Exercise 13-4 (Algo) Special Order Decision [LO13-4] imperial Jewelers manufactures and sells a gold bracelet for $404.00 The company's accounting system says that the unit product cost for this bracelet is $258.00 as shown below 5 142 34 5 254 direct materials Direct labor nanufacturing overhead unit product cost The members of a wedding party have approached Imperial Jewelers about buying 26 of these gold bracelets for the discounted price of $364.00 each. The members of the wedding party would like special filigree applied to the bracelets that would increase the direct materials cost per bracelet by $7 Impenal Jewelers would also have to buy a special tool for $452 to apply the fingree to the bracelets 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 overhead is fixed and unaffected by variations in how much jewelry is produced in any given period However, $800 of the overhead is variable with respect to the number of bracelets produced. The company also belleves that accepting this order would have no effect on its ability to produce and sell jewelry to other customers. Furthermore, the company could fulfil the wedding party's order using its existing manufacturing capacity Required: 1 What is the financial advantage (disadvantages of accepting the special order from the wedding party? 2. Should the company accept the special order?
Exercise 13-4 (Algo) Special Order Decision [LO13-4] imperial Jewelers manufactures and sells a gold bracelet for $404.00 The company's accounting system says that the unit product cost for this bracelet is $258.00 as shown below 5 142 34 5 254 direct materials Direct labor nanufacturing overhead unit product cost The members of a wedding party have approached Imperial Jewelers about buying 26 of these gold bracelets for the discounted price of $364.00 each. The members of the wedding party would like special filigree applied to the bracelets that would increase the direct materials cost per bracelet by $7 Impenal Jewelers would also have to buy a special tool for $452 to apply the fingree to the bracelets 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 overhead is fixed and unaffected by variations in how much jewelry is produced in any given period However, $800 of the overhead is variable with respect to the number of bracelets produced. The company also belleves that accepting this order would have no effect on its ability to produce and sell jewelry to other customers. Furthermore, the company could fulfil the wedding party's order using its existing manufacturing capacity Required: 1 What is the financial advantage (disadvantages of accepting the special order from the wedding party? 2. Should the company accept the special order?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 13-4 (Algo) Special Order Decision [LO13-4]
imperial Jewelers manufactures and sells a gold bracelet for $404.00. The company's accounting system says that the unit product
cost for this bracelet is $258 00 as shown below
Direct materials
Direct labor
manufacturing overhead
unit product cost
5.342
62
34
5 255
The members of a wedding party have approached Imperial Jewelers about buying 26 of these gold bracelets for the discounted price
of $364.00 each. The members of the wedding party would like special filigree applied to the bracelets that would increase the direct
materials cost per bracelet by $7 Impenal Jewelers would also have to buy a special tool for $452 to apply the fingree to the bracelets
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 overhead is fixed and
unaffected by variations in how much jewelry is produced in any given period However, $8.00 of the overhead is variable with respect
to the number of bracelets produced. The company also believes that accepting this order would have no effect on its ability to
produce and sell jewelry to other customers. Furthermore, the company could fulfill the wedding party's order using its existing
manufacturing capacity
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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe48f2cc2-c0df-4180-9b02-9e89bea4a0c0%2F1a5e8c87-2858-4c85-b090-0baf5a40cc95%2Fak0e72_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 13-4 (Algo) Special Order Decision [LO13-4]
imperial Jewelers manufactures and sells a gold bracelet for $404.00. The company's accounting system says that the unit product
cost for this bracelet is $258 00 as shown below
Direct materials
Direct labor
manufacturing overhead
unit product cost
5.342
62
34
5 255
The members of a wedding party have approached Imperial Jewelers about buying 26 of these gold bracelets for the discounted price
of $364.00 each. The members of the wedding party would like special filigree applied to the bracelets that would increase the direct
materials cost per bracelet by $7 Impenal Jewelers would also have to buy a special tool for $452 to apply the fingree to the bracelets
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 overhead is fixed and
unaffected by variations in how much jewelry is produced in any given period However, $8.00 of the overhead is variable with respect
to the number of bracelets produced. The company also believes that accepting this order would have no effect on its ability to
produce and sell jewelry to other customers. Furthermore, the company could fulfill the wedding party's order using its existing
manufacturing capacity
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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