Imperial jewelers is considering a special order

Imperial Jewelers is considering a special order for 16 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $403.00 and its unit product cost is $266.00 as shown below:

Direct materials

$

149

Direct labor

80

Manufacturing overhead

37

Unit product cost

$

266

Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $9 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. This filigree would require additional materials costing $8 per bracelet and would also require acquisition of a special tool costing $460 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.

Required:

What effect would accepting this order have on the company’s net operating income if a special price of $363.00 per bracelet is offered for this order? (Enter all amounts as positive values.)

Per Total 16

Unit bracelets

Incremental revenue _______________ _______________

Incremental costs:

Variable costs:

Direct materials _______________ ________________

Direct labor _______________ ________________

Variable manufacture overhead _______________ ________________

Special filigree _______________ _________________

Total variable costs _______________ _________________

Fixed costs:

Purchase of special tool _________________

Total incremental cost _____________________

Incremental net operating income (loss) _____________________

Should the special order be accepted at this price?

No

Yes

Refer to the original data ($61 ticket price per person). Prepare a CVP graph for the dinner-dance from zero tickets up to 500 tickets sold. (Use the line tool to draw three single lines (Total Sales Revenue, Fixed Expenses, Total Expenses). Each line should only contain the two endpoints. For the CVP Graph to grade correctly, you must enter the exact coordinates of each endpoint. Once all points have been plotted, click on the line (not individual points) and a tool icon will pop up. You can use this to enter exact co-ordinates for your points as needed. To remove a line/point from the graph, click on the line/point and select delete option.)

The Hartford Symphony Guild is planning its annual dinner-dance. The dinner-dance committee has assembled the following expected costs for the event:

Dinner (per person)

$15

Favors and program (per person)

$7

Band

$2,000

Rental of ballroom

$1,250

Professional entertainment during intermission

$2,000

Tickets and advertising

$600

The committee members would like to charge $61 per person for the evening’s activities.

Required:

1.

Compute the break-even point for the dinner-dance (in terms of the number of persons who must attend).

2.

Assume that last year only 250 persons attended the dinner-dance. If the same number attend this year, what price per ticket must be charged in order to break even? (Round your answer to 2 decimal places.)

Refer to the original data ($61 ticket price per person). Prepare a CVP graph for the dinner-dance from zero tickets up to 500 tickets sold. (Use the line tool to draw three single lines (Total Sales Revenue, Fixed Expenses, Total Expenses). Each line should only contain the two endpoints. For the CVP Graph to grade correctly, you must enter the exact coordinates of each endpoint. Once all points have been plotted, click on the line (not individual points) and a tool icon will pop up. You can use this to enter exact co-ordinates for your points as needed. To remove a line/point from the graph, click on the line/point and select delete option.)