Explore BrainMass

Explore BrainMass

    Impact of special order

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Manor, Inc. which has excess capacity, received a special order for 4000 units at a price of $15 per unit. Currently, production and sales are budgeted for 10,000 units without considering the special order. Budget information for the current year follows:
    Sales $190,000
    Less: CGS 152,000
    Gross Margin $38,000

    Cost of goods sold includes $20,000 of fixed manufacturing cost. If the special order is accepted, the company's income will (increase)(decrease) by: ?

    © BrainMass Inc. brainmass.com June 3, 2020, 10:09 pm ad1c9bdddf

    Solution Preview

    Since there is excess capacity, the relevant costs are the variable costs since the fixed cost will not change. The ...

    Solution Summary

    The solution explains how to calculate how a special order will impact a companies net income.