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 15,000 units of product, computations for the sales price per clock follow.

Unit-level costs	$	345,000
Fixed costs		75,000
Total cost (a)		420,000
Markup (a 0.25)		105,000
Total sales (b)	$	525,000
Sales price per unit (b 15,000)	$	35

Required:

a-1.	Elsea has excess capacity and receives a special order for 5,000 clocks for $30 each. Calculate the contribution margin per unit from the special order.

a-2.

Should Elsea accept the special order?

	Yes
	No

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