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:

Difference Threshold

The minimum difference in stimulation that a person can detect 50% of the time, also known as the just noticeable difference (JND).

Electromagnetic Waves

Waves of the electromagnetic field, propagating through space, carrying electromagnetic radiant energy.

Stimulation

The action of arousing interest, excitement, or activity in someone or something.

Absolute Threshold

The minimum intensity of a stimulus that one can detect 50% of the time, a concept used in sensory and perception studies.