At Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $55,000 per year, to ease the problem. Using the extra worker, the company will be able to engrave 8,000 more units per year. The selling price per unit is $16.00. The cost per unit currently is $11.75 as shown:Direct material$4.45Direct labor2.10Variable overhead1.40Fixed overhead (primarily depreciation of equipment)3.80Total$11.75What is the annual financial impact of hiring the extra worker for the bottleneck process?$______ __________ At Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $55,000 peryear, to ease the problem. Using the extra worker, the company will be able to engrave 8,000 more units per year. The selling price per unit is $16.00. The cost per unitcurrently is $11.75 as shown:Direct material$4.45Direct labor2.10Variable overhead1.40Fixed overhead (primarily depreciation of equipment)3.80Total$11.75What is the annual financial impact of hiring the extra worker for the bottleneck process?

We need to use differential cost analysis to calculate annual financial impact of hiring the extra…

Answered: At Gems in the Rough, a jewelry…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 12PA: Ac Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is...

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At Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $55,000 per year, to ease the problem. Using the extra worker, the company will be able to engrave 8,000 more units per year. The selling price per unit is $16.00. The cost per unit currently is $11.75 as shown:

Direct material	$4.45
Direct labor	2.10
Variable overhead	1.40
Fixed overhead (primarily depreciation of equipment)	3.80
Total	$11.75

What is the annual financial impact of hiring the extra worker for the bottleneck process?

$______ __________

At Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $55,000 per
year, to ease the problem. Using the extra worker, the company will be able to engrave 8,000 more units per year. The selling price per unit is $16.00. The cost per unit
currently is $11.75 as shown:
Direct material
$4.45
Direct labor
2.10
Variable overhead
1.40
Fixed overhead (primarily depreciation of equipment)
3.80
Total
$11.75
What is the annual financial impact of hiring the extra worker for the bottleneck process?

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