Question
5 . Snyder, Inc., which has excess capacity, received a special order for 4,200 units at a price of $17 per unit. Currently, production and
5. Snyder, Inc., which has excess capacity, received a special order for 4,200 units at a price of $17 per unit. Currently, production and sales are anticipated to be 12,000 units without considering the special order. Budget information for the current year follows. Sales $ 240,000 Less: Cost of goods sold 186,000 Gross margin $ 54,000 Cost of goods sold includes $30,000 of fixed manufacturing cost. If the special order is accepted, the company's income will:
increase by $6,300.
decrease by $6,300.
increase by $16,800.
decrease by $16,800.
None of these.
7.Song, a division of Carolina Enterprises, currently makes 160,000 units of a product that has created a number of manufacturing problems. Song's costs follow.
Manufacturing costs: | |
Variable | $ 630,000 |
Fixed | 183,000 |
Allocated corporate administrative cost | 64,000 |
If Song were to discontinue production, fixed manufacturing costs would be reduced by 70%. The relevant cost of deciding whether the division should purchase the product from an outside supplier is:
$813,000.
$822,100.
$630,000.
$758,100.
$684,900.
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