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Elkhorn, Inc., which has excess capacity, received a special order for 4,100 units at a price of $16 per unit. Currently, production and sales are
Elkhorn, Inc., which has excess capacity, received a special order for 4,100 units at a price of $16 per unit. Currently, production and sales are anticipated to be 14,000 units without considering the special order. Budget information for the current year follows.
Sales | $ | 252,000 | ||
Less: Cost of Goods Sold | 196,000 | |||
Gross Margin | $ | 56,000 | ||
Cost of goods sold includes $28,000 of fixed manufacturing cost. If the special order is accepted, the company's income will:
Multiple Choice
A. increase by $8,200.
B. decrease by $8,200.
C. increase by $16,400.
D. decrease by $16,400.
E. None of the answers is correct.
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