Elkhorn, Incorporated, which has excess capacity, received a special order for 4, 200 units at a price of $17per unit. Currently, production and sales are anticipated to be 13,000 units without considering the specialorder. Budget information for the current year follows. Sales $ 260, 000 Less: Cost of Goods Sold 195, 000Gross Margin $ 65,000 Cost of goods sold includes $52, 000 of fixed manufacturing cost. If the special orderis accepted, the company's income will: Multiple Choice None of the answers is correct. decrease by $8,400.increase by $25, 200. decrease by $25, 200. increase by $8,400.

Relevent cost per unit = (Cost of goods sold - Fixed manufacturing costs)/Units sold=…

Answered: Elkhorn, Incorporated, which has excess…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 16E

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A company that manufactures a single product has provided the following budgeted standard cost and revenue details for next year. Selling price per unit – GHS24.00; Variable manufacturing cost per unit – GHS8.60; Fixed manufacturing costs – GHS650,000; Fixed general, selling and distribution costs – GHS230,400. The company expects to sell 90,000 units of the product next year and plans to pay a sales commission of 5 per cent of the selling price. Determine the percentage by which the budgeted sales can fall before the company begins to make a loss.

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