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 $149.00 as shown below:

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Business

Danny Adams

24 March, 03:31

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 $149.00 as shown below:

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Cory Mcdaniel · Answer 1

Total Marginal Cost of each bracelet is:

Direct materials. $84.00

Add: Direct labor $45.00

Add: Variable Portion. $4.00

Add: Additional Filigree

Materials. $2.00

Total. $135.00 per bracelet

Sales Price - Marginal Cost = $169.95 - $135.00 = $34.95 per bracelet

Total price of 20 bracelet = $18.95 * 20

= $699.00

Total Operating Income before accounting for the special tool that cost, $250.00

= $699.00 - $250.00

Total operating income = $449.00

Note that the remaining fixed maintenance overhead ($16) was not subtracted because manufacturing costs represent only the expenses necessary to make the product unlike production cost.