Elkhorn, 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
Cost of goods sold includes $30,000 of fixed manufacturing cost. If the special order is accepted, the company's income will:
increase by $2,000.
decrease by $14,000.
decrease by $2,000.
increase by $14,000.
None of the answers is correct.
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