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sergeinik [125]
2 years ago
9

Imperial Jewelers manufactures and sells a gold bracelet for $403.00. The company’s accounting system says that the unit product

cost for this bracelet is $264.00 as shown below:
Direct materials $143
Direct labor 90
Manufacturing overhead 31
Unit product cost $264


The members of a wedding party have approached Imperial Jewelers about buying 22 of these gold bracelets for the discounted price of $361.00 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 $454 and that would increase the direct materials cost per bracelet by $8. 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 jewelry 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?
Business
1 answer:
AysviL [449]2 years ago
3 0

Answer:

a) Financial advantage   <u> $2,208 </u>

b) The company should accept the special order, as it will increase its profit by $2,208

Explanation:

<em>The relevant costs for decision to accept the special order are  </em>

<em>I Incremental Revenue from the special order  </em>

<em>2. incremental variable cost </em>

<em>3. The cost of the special tool</em>

Unit variable cost = 143 + 90 + 8 + 7 = $240

<em>Note that that the increase in material cost of $8 and the variable manufacturing overhead of $7 are relevant to the special order decision. Hence they are added.</em>

<em>And the balance of manufacturing overhead would be incurred either way. Therefore , they are not relevant for the decision</em>

                                                                                                       $

Sales revenue from special order

(22× $361.00)                                                                               7942

Variable cost of special order

(22× $240 )                                                                                    (5280 )

Cost of special tool                                                                      <u> (454)</u>

Financial advantage                                                                    <u> 2,208 </u>

The company should accept the special order, as it will increase its profit by $2,208

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special - time order for 15,000 bird feeders at $ 3,50 per unit Bluebird currently produces and sells . This level represents 80
schepotkina [342]

Answer:

$15,000 Increase

Explanation:

Calculation to determine what the effect on net income will be :

Effect on net income = (15,000 x $3.50) – ($2.50x 15,000)

Effect on net income = $52,500-$37,500

Effect on net income = $15,000 Increase

Therefore If Bluebird accepts this additional business , the effect on net income will be :$15,000 Increase

5 0
3 years ago
The demand function for widgets is given by D(P) 16 2P. Compute the change in consumer surplus when the price of a widget increa
eduard

Question: The demand function for widgets is given by D(P) = 16 − 2P. Compute the change inconsumer surplus when price of a widget increases for $1 to $3. Illustrate your result graphically

Answer:

For price of a widget equal to $1 consumer surplus is

D(1) = 16 - 2(1) = 14

CS₁ = ½ × (8 – 1) × D(1) = ½ × 7 × 14 = 49.

When price is equal to $3 consumer surplus is

D(3) = 16 - 2(3) = 10

CS₃ = ½ × (8 – 3) × D(3) = ½ × 5 × 10 = 25

8 0
3 years ago
Smith Wholesale budgeted sales price is $40 per unit for an budgeted sales volume of 5,000 units. The actual performance was 5,5
alex41 [277]

Answer:

$20,000 Favorable

Explanation:

As for the provided information, we have:

Sales Volume Variance is defined as the variance arising due to difference in sales quantity based on standard price.

Formula for the above = (Actual Sales - Budgeted Sales) \times Standard Price

= (5,500 - 5,000) \times $40

= $20,000

This variance shall be categorized as favorable, as the actual sales quantity is more than the static budgeted quantity.

Therefore, Sales Volume Variance = $20,000 Favorable

8 0
2 years ago
Which of the following acquisitions would be considered the LEAST related? Group of answer choices A candy manufacturer purchase
kari74 [83]

Answer:

An upscale "white-tablecloth" restaurant chain acquires a travel agency.

Explanation:

Few reasons:

  • Such restaurant are luxurious, so they would want to collaborate with travel agencies but not acquire the whole agency itself.
  • Being the upscale restaurant they have to work on their own image not acquiring unnecessary agencies.
  • They have their own customer market, who won't compromise on the choices they make, so they don't need to acquire a travel agency to increase it's branding as not everyone can afford such restaurants.
4 0
3 years ago
in 1998 fischer corp issued bonds with an 8 percent coupon rate and a 1000 face value. the bonds mature on marc 1, 2023. if an i
ArbitrLikvidat [17]

Answer:

approximate YTM = 7.48%

Explanation:

the approximate yield to maturity = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]

approximate YTM = {$80 + [($1,000 - $1,050)/15]} / [($1,000 + $1,050)/2]

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approximate YTM = $76.67 / $1,025

approximate YTM = 0.0748 ≈ 7.48%

5 0
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