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 25,000 units of product, computations for the sales price per clock follow.

Unit-level costs	$	190,000
Fixed costs		50,000
Total cost (a)		240,000
Markup (a 0.25)		60,000
Total sales (b)	$	300,000
Sales price per unit (b 25,000)	$	12

Required

a-1.	Elsea has excess capacity and receives a special order for 8,000 clocks for $10 each. Calculate the contribution margin per unit.(Round your answer to 2 decimal places.)

a-2.	Should Elsea accept the special order?
	Yes No

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