Ch.10 Warm-up Exercise × Level Three-What\'s Due w | + O | ezto.mh education.com
ID: 2576210 • Letter: C
Question
Ch.10 Warm-up Exercise × Level Three-What's Due w | + O | ezto.mh education.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, 311 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 $482 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. 1. What effect would accepting this order have on the company's net operating income if a special price of 3301.00 per bracelet is offered for this order? (Enter all amounts as positive values.) Total 27 Unit Bracelets Variable costs Direct materials Direct labor Special figree Total vaniable cost Fixed costa hereExplanation / Answer
The following is the required table:
Per Unit Total 27 bracelets Incremental revenue ($361 * 27) $361.00 $9,747 Incremental costs: Variable costs Direct materials ($147 * 27) $147 $3,969 Direct labour ($88*27) $88 $2,376 Vsriable manufacturing overhead ($11*27) $11 $297 Special Figree ($10*27) $10 $270 Total variable cost $256 $6,912 Fixed costs Purchase of special tool $462 Total incremental cost ($6912 + 462) $7,374 Incremental net operating income (loss) $2,373