Imperial Jewelers manufactures and sells a gold bracelet for$404.00. The company’s accounting system says that the unit productcost for this bracelet is $259.00 as shown below:

Direct materials	$	143
Direct labor		81
Manufacturing overhead		35
Unit product cost	$	259

The members of a wedding party have approached Imperial Jewelersabout buying 27 of these gold bracelets for the discounted price of$364.00 each. The members of the wedding party would like specialfiligree applied to the bracelets that would require ImperialJewelers to buy a special tool for $467 and that would increase thedirect materials cost per bracelet by $5. The special tool wouldhave no other use once the special order is completed.

To analyze this special order opportunity, Imperial Jewelers hasdetermined that most of its manufacturing overhead is fixed andunaffected by variations in how much jewelry is produced in anygiven period. However, $6.00 of the overhead is variable withrespect to the number of bracelets produced. The company alsobelieves that accepting this order would have no effect on itsability to produce and sell jewelry to other customers.Furthermore, the company could fulfill the wedding party’s orderusing its existing manufacturing capacity.

Required:

1. What is the financial advantage (disadvantage) of acceptingthe special order from the wedding party?

2. Should the company accept the special order?