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Snider, Inc., which has excess capacity, received a special order for 3,000 units at a price of $15 per unit which it could produce with
Snider, Inc., which has excess capacity, received a special order for 3,000 units at a price of $15 per unit which it could produce with the excess capacity. | ||||||||
Current production and sales are anticipated to be 10,000 units without considering the special order. | ||||||||
Total Cost of Goods Sold below includes $40,000 of fixed manufacturing cost. | ||||||||
Below is budget information for the current year sales of 10,000 units follows. | ||||||||
Sales | $180,000 | |||||||
Less: Cost of Goods Sold | 140,000 | |||||||
Gross Margin | $40,000 | |||||||
Required: | ||||||||
If the special order is accepted, calculate the specific change in income for only the special order. Make sure you show your work. | ||||||||
Provide a recommendation to management if the company should accept or reject this special order. Explain in detail your recommendation to management. |
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