Imperial Jewelars is considering a spacial order for 29 hand

Imperial Jewelars is considering a spacial order for 29 handcraftad gold bracalets to be given as gifts to members of a wadding party. The normal selling price of a gold bracelat is 5403.00 and its unit product cost is 5264.00 as shown below: Direct malerias S 144 09 Direct labor Manufacturing overhead Unit product cost S 254 However, $15 of the overhead is variable with respect to the number of bracelels produced. The cuslomer who is interested in the special Mast of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given bracelet order would like special filigree applied to the bracelets. This filigree would require additional materials costing S14 per bracelet and would also require acquisition of a special tool costing $465 that would have no other use once the special order is completed This order would have no effect on the compary\'s regular sales and the order could be fulfilled using the company\'s existing capacity without affecting any other order Required: 1. What effect would accepting this order have on the company\'s net operating income if a special price of S363.00 per bracelet is offered for this order? (Enter all amounts as positive values.) Unit Incremental revenue Incremental costs Variatie ?ets Direct malerials Direct labor Variable manufacturing ovehead Special fligree Total vanable cost Fixed costs Purchase af special tool Total incremental cost Incremental net operating income (loss)

Solution

Per unit Total Incremental revenue 363 10527 Incremental Cost: Variable cost: Direct Material 144 4176 Direct Labour 89 2581 Variable Manufacturing OH 15 435 Special Figree 14 406 Total Variable cost 262 7598 Fixed cost: Purchase of SpecialTool 465 Total Incremental cost 8063 Incremental Net operating income 2464