Exercise 4 (Evaluating Special Order) Glamour Jewelers is considering a special order for 10 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is P3,899.50 and its unit product cost is P2,640.00 as shown below: Materials. Direct labor Manufacturing overhead. Unit product cost. . P1,430.00 860.00 350.00 P2,640.00 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, P70 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. materials costing P60 per bracelet and would also require acquisition of a special tool costing P4,650 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. This filigree would require additional Required: What effect would accepting this order have on the company's net operating income if a special price of P3,499.50 is offered per bracelet for this order? Should the special order be accepted at this price?
Exercise 4 (Evaluating Special Order) Glamour Jewelers is considering a special order for 10 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is P3,899.50 and its unit product cost is P2,640.00 as shown below: Materials. Direct labor Manufacturing overhead. Unit product cost. . P1,430.00 860.00 350.00 P2,640.00 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, P70 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. materials costing P60 per bracelet and would also require acquisition of a special tool costing P4,650 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. This filigree would require additional Required: What effect would accepting this order have on the company's net operating income if a special price of P3,499.50 is offered per bracelet for this order? Should the special order be accepted at this price?
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter27: Lean Manufacturing And Activity Analysis
Section: Chapter Questions
Problem 1PA: Lean principles Bright Night, Inc., manufactures light bulbs. Its purchasing policy requires that...
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