Instructions
Consider the following scenario and then answer the questions below.
Evaluating a Special Order
Imperial Jewelers in considering a special order for 20 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $189.95 and its unit product cost is $149.00 as shown below:
Direct Materials
$84.00
Direct Labor
$45.00
Manufacturing Overhead
$20.00
Unit Product Cost
$149.00
Most of the manufacturing overhead is fixed and unaffected by variation in how much jewelry is produced in any given period. However, $4.00 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 material costing $2.00 per bracelet and would also require acquisition of a special tool costing $250 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.
Answer the following questions in either a word or an excel document. Be sure to show your work and the calculations you used to support your answer to the questions.
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