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

question 52

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. $\begin{array}{lr}\text { Sales } & \$ 190,000 \\\text { Less: Cost of Goods Sold } & \underline{145,000} \\\text { Gross Margin } & \underline{\$ 45,000}\end{array}$ 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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Definitions:

Held-to-maturity Debt Securities

Investments in bonds or other debt securities that a company intends and is able to hold until they mature.

Current Assets

Short-term financial resources a company holds, including cash, marketable securities, receivables, and inventory, which are expected to be converted into cash within a year.

Foreign Exchange Rate

Foreign Exchange Rate is the price at which one currency can be exchanged for another currency, which can fluctuate based on market conditions.

Unrealized Gains and Losses

Increases or decreases in the value of investments that have not yet been sold.