Imperial Jewelers manufactures and sells a gold bracelet for $401.00. The company's accounting system says that the unit product cost for this bracelet is $272.00 as shown below: Direct materials Direct labor Manufacturing overhead Unit product cost $ 146 89 37 $ 272 The members of a wedding party have approached Imperial Jewelers about buying 30 of these gold bracelets for the discounted price of $361.00 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 $6. Imperial Jewelers would also have to buy a special tool for $457 to apply the filigree 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, $7.00 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?
Imperial Jewelers manufactures and sells a gold bracelet for $401.00. The company's accounting system says that the unit product cost for this bracelet is $272.00 as shown below: Direct materials Direct labor Manufacturing overhead Unit product cost $ 146 89 37 $ 272 The members of a wedding party have approached Imperial Jewelers about buying 30 of these gold bracelets for the discounted price of $361.00 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 $6. Imperial Jewelers would also have to buy a special tool for $457 to apply the filigree 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, $7.00 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Imperial Jewelers manufactures and sells a gold bracelet for $401.00. The company's accounting system says that the unit
product cost for this bracelet is $272.00 as shown below:
Direct materials
Direct labor
Manufacturing overhead
Unit product cost
The members of a wedding party have approached Imperial Jewelers about buying 30 of these gold bracelets for the
discounted price of $361.00 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 $6. Imperial Jewelers would also have to buy a special tool for
$457 to apply the filigree 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, $7.00 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.
$ 146
89
37
$ 272
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?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
What in the financial advantano (dienduantanal of anting the ancial ander from the windding nat
R
< Previ
2 of 8 ⠀
Next >
Transcribed Image Text:Required:
1. What is the financial advantage (disadvantage) of accepting the special order from the weddin
2. Should the company accept the special order?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
What is the financial advantage (disadvantage) of accepting the special order from the wedding party
< Prev
Required 1
2 of 8
‒‒‒
Required 2 >
Next >
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education