Concept explainers
Special Order Decision
Imperial Jewelers manufactures and sells a gold bracelet for $189.95. The company’s accounting system says that the unit product cost for this bracelet is $14900 as shown below:
The members of a wedding party hive approached Imperial Jewelers about buying 20 of these gold bracelets for the discounted price of $169.95 each. The members of the wedding party would like special filigree applied to the bracelets that would require Imperial Jewelers to buy a special tool for $250 and that would increase the direct materials cost per bracelet by S2 00. 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
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?
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