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Snider, Inc., which has excess capacity, received a special order for 3,000 units at a price of $14 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 $14 per unit which it could produce with the excess capacity. | |||
Currently, production and sales are anticipated to be 10,000 units without considering the special order. | |||
Cost of goods sold includes $30,000 of fixed manufacturing cost. | |||
Below is budget information for the current year sales of 10,000 units follows. | |||
Sales | $200,000 | ||
Less: cost of goods sold | 150,000 | ||
Gross Margin | $50,000 | ||
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. | |||
Recommendation with calculations and impact to income of special order: |
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