Final answer:
To determine the financial advantage or disadvantage of accepting the special order, calculate the total revenue and total cost. Compare the contribution margin of the special order to the company's average contribution margin to decide whether to accept the order. Consider the impact on the company's ability to produce and sell to other customers.
Step-by-step explanation:
To determine the financial advantage or disadvantage of accepting the special order from the wedding party, we need to calculate the total revenue and total cost associated with the order. The total revenue can be calculated by multiplying the discounted price per bracelet ($169.95) by the number of bracelets (20). The total cost can be calculated by considering the direct materials, direct labor, manufacturing overhead, and the additional cost for the special tool. By subtracting the total cost from the total revenue, we can determine the financial advantage or disadvantage.
Next, we need to consider whether the company should accept the special order. One way to analyze this is by comparing the contribution margin of the special order to the company's average contribution margin. The contribution margin is calculated by subtracting the variable costs (direct materials, direct labor, and variable portion of overhead) from the selling price. If the contribution margin of the special order is greater than the company's average contribution margin, it may be beneficial to accept the order. Additionally, the company should also consider the impact of the special order on its ability to produce and sell to other customers.