Baird 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 14,000 units of product, computations for the sales price per clock follow:

Baird has excess capacity and receives a special order for 6,000 clocks for $20 each. Calculate the contribution margin per unit. Based on this, should Baird accept the special order?

Prepare a contribution margin income statement for the special order.

Unit-level costs Fixed costs Total cost (a) Markup (a x 0.30) Total sales (b) Sales price per unit (b 14,000) $210,000 70,000 280,000 84,000 $364,000 26