Contribution margin per unit from the special order

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Reference no: EM131205853

Elsea Company, which produces and sells a small digital clock, bases its pricing strategy on a 20 percent markup on total cost. Based on annual production costs for 11,000 units of product, computations for the sales price per clock follow. Unit-level costs $ 198,000 Fixed costs 77,000 Total cost (a) 275,000 Markup (a × 0.20) 55,000 Total sales (b) $ 330,000 Sales price per unit (b ÷ 11,000) $ 30 Required a-1. Elsea has excess capacity and receives a special order for 8,000 clocks for $20 each.

A. Calculate the contribution margin per unit from the special order.

B. Prepare a contribution margin income statement for the special order.

Reference no: EM131205853

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