Ch.10 Warm-up Exercisex B Level Three-what\'s Duew/ + | ezto.mheducation.com/hm.
ID: 2576209 • Letter: C
Question
Ch.10 Warm-up Exercisex B Level Three-what's Duew/ + | ezto.mheducation.com/hm.tpx Imperial Jewelers is considering a special order for 27 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $401.00 and its unit product cost is $275.00 as shown below: Direct materials Direct labor Manufacturing overhead $ 147 40 $ 275 Unit product cost Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period However, 511 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 $10 per bracelet and would also require acquisition of a special tool costing $462 that would have no other use once the special order is completed. This order would have no eftect 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 ordet have on the company's net operating income if a special price of S361:00 per bracelet is offered for this order? (Enter all amounts as positive values.) Per Total 27 Unit Bracelets Incremental costs Variable costs Direct materials Darect labor Variable manufacturing overhead Special Tigree Total variabie coet Fired cosls 848 PMExplanation / Answer
If special order is accepted, net operating income would increase by $2373
Effect that special order have on net operating income: Particulars Per Unit Total 27 bracelets Incremental Revenue 361 9747 Incremental Costs Variable Costs Direct Material 147 3969 Direct Labor 88 2376 Variable Manufacturing Overhead 11 297 Speial filgree 10 270 Total Variable Cost 6912 Fixed Costs Purchase of Special Tool 462 Total Incremental Costs 7374 Incremental Operating Income 2373