SlideShare a Scribd company logo
Imperial Jewelers manufactures and sells a gold bracelet for $406.00. The company's accounting
system says that the unit product cost for this bracelet is $262.00 as shown below: The members
of a wedding party have approached Imperial Jewelers about buying 27 of these gold bracelets
for the discounted price of $366.00 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 Jewelets 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 jewolry 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? Complete this question by entering your answers
in the tabs below. What is the financial advantage (disadvantage) of accepting the special order
from the wedding party?
Should the company accept the special order?

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Imperial Jewelers manufactures and sells a gold bracelet for $406.pdf

  • 1. Imperial Jewelers manufactures and sells a gold bracelet for $406.00. The company's accounting system says that the unit product cost for this bracelet is $262.00 as shown below: The members of a wedding party have approached Imperial Jewelers about buying 27 of these gold bracelets for the discounted price of $366.00 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 Jewelets 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 jewolry 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? Complete this question by entering your answers in the tabs below. What is the financial advantage (disadvantage) of accepting the special order from the wedding party? Should the company accept the special order?