Imperial Jewelers manufactures and sells a gold bracelet for $400.00. The company's accounting system says...
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Imperial Jewelers manufactures and sells a gold bracelet for $400.00. The company's accounting system says that the unit product cost for thls bracelet Is $272.00 as shown below Direct materials Direct labor Manufacturing overhead Unit product cost $147 86 39 $272 The members of a wedding party have approached Imperlal Jewelers about buying 24 of these gold bracelets for the discounted price of $360.00 each. The members of the wedding party would llke speclal fillgree applied to the bracelets that would require Imperial Jewelers to buy a speclal tool for $463 and that would Increase the direct materlals cost per bracelet by $8. The speclal tool would have no other use once the speclal order Is completed. To analyze thls speclal order opportunity, Imperlal Jewelers has determined that most of Its manufacturing overhead is fixed and unaffected by varlations In how much Jewelry Is produced In any glven perlod. However, $9.00 of the overhead Is varlable with respect to the number of bracelets produced. The company also belleves that accepting this order would have no effect on Its ablity to produce and sell Jewelry to other customers. Furthermore, the company could fulfill the wedding party's order using Its exlsting manufacturing capacity. Required: 1. What Is the financial advantage (disadvantage) of accepting the speclal 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 is the financial advantage (disadvantage) of accepting the special order from the wedding party? Should the company accept the special order? OYes ONo
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