Elsea Company, which produces and sells a small digital clock, bases its pricing strategy on a 25 percent markup on total cost. Based on annual production costs for 14,000 units of product, computations for the sales price per clock follow.

Unit-level costs	$	196,000
Fixed costs		84,000
Total cost (a)		280,000
Markup (a 0.25)		70,000
Total sales (b)	$	350,000
Sales price per unit (b 14,000)	$	25

Required:

1.

Elsea has excess capacity and receives a special order for 3,000 clocks for $17 each. Calculate the contribution margin per unit from the special order.

contribution margin per unit ___________________________

Prepare a contribution margin income statement for the special order.

ELSEA COMPANY
Income Statement