Imperial Jewelers is considering a special order for 28 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $400.00 and its unit product cost is $259.00 as shown below: Direct materials Direct labor Manufacturing overhead $ 147 81 31 Unit product cost $ 259 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $8 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 $7 per bracelet and would also require acquisition of a special tool costing $465 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: 1. What effect would accepting this order have on the company's net operating income if a special price of $360.00 per bracelet is offered for this order? (Enter all amounts as positive values.)
Imperial Jewelers is considering a special order for 28 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $400.00 and its unit product cost is $259.00 as shown below: Direct materials Direct labor Manufacturing overhead $ 147 81 31 Unit product cost $ 259 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $8 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 $7 per bracelet and would also require acquisition of a special tool costing $465 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: 1. What effect would accepting this order have on the company's net operating income if a special price of $360.00 per bracelet is offered for this order? (Enter all amounts as positive values.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Imperial Jewelers is considering a special order for 28 handcrafted gold bracelets to be given as gifts to
members of a wedding party. The normal selling price of a gold bracelet is $400.00 and its unit product cost
is $259.00 as shown below:
Direct materials
Direct labor
Manufacturing overhead
$ 147
81
31
Unit product cost
$ 259
Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced
in any given period. However, $8 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 $7 per bracelet and would also require
acquisition of a special tool costing $465 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:
1. What effect would accepting this order have on the company's net operating income if a special price of
$360.00 per bracelet is offered for this order? (Enter all amounts as positive values.)
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