Elkhorn, Inc., which has excess capacity, received a special order for 4,000 units at a...
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Accounting
Elkhorn, Inc., which has excess capacity, received a special order for 4,000 units at a price of $15 per unit. Currently, production and sales are anticipated to be 10,000 units without considering the special order. Budget information for the current year follows.
| Sales | $ | 190,000 | |
| Less: Cost of Goods Sold | 145,000 | ||
| Gross Margin | $ | 45,000 |
Cost of goods sold includes $30,000 of fixed manufacturing cost. If the special order is accepted, the company's income will:
| increase by $2,000. | ||
| decrease by $14,000. | ||
| decrease by $2,000. | ||
| increase by $14,000. | ||
| None of the answers is correct. |
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