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Snyder, Inc Cost of Goods Sold Includes $30,000 of Fixed Manufacturing Cost

Question 36

Multiple Choice

Snyder, 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\begin{array}{lr}\text { Sales } & \$ 190,000 \\\text { Less: Cost of Goods Sold } & \underline{145,000} \\\text { Gross Margin } & \underline{\$ 45,000}\end{array} Cost of goods sold includes $30,000 of fixed manufacturing cost. If the special order is accepted, the company's income will:


A) increase by $2,000.
B) decrease by $2,000.
C) increase by $14,000.
D) decrease by $14,000.
E) None of the other answers are correct.

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