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.

The company's income will increase by $14,000.

Explanation:

Cost of goods sold per unit excludes fixed manufacturing cost:  

($145,000 - $30,000)/10,000 = $11.5

If the special order is accepted:

Sales revenue of the special order = 4,000 x $15 = $60,000

Cost of good sold of the special order = 4,000 x $11.5 = $46,000

Fixed manufacturing cost does not change after  the special order is accepted.

Income from the special order = $60,000 - $46,000 = $14,000

The company's income will increase by $14,000.

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.