Shane Company, which produces and sells a small digital clock, bases its pricing strategy on a 30 percent markup on total cost. Based on annual production costs for 15,000 units of product, computations for the sales price per clock follow.

Required:

a. Shane has excess capacity and receives a special order for 6,000 clocks for \($15\) each. Calculate the contribution margin per unit; based on it, should Shane accept the special order?

b. Support your answer by preparing a contribution margin income statement for the special order.

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Unit-level costs Fixed costs $180,000 60,000 Total cost (a) 240,000 Markup (a x 0.30) 72,000 Total sales (b) $312,000 Sales price per unit (b 15,000) $20.80