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Finch Company, which produces and sells a small digital clock, bases its pricing strategy on a 25 percent markup on total cost. Based on annual
Finch 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 16,000 units of product, computations for the sales price per clock follow. Unit- level costs $ 240, 000 Fixed costs 80,000 Total cost (a) 320, 090 Markup (a x 0.25) 80, 000 Total sales (b) $ 400, 000 Sales price per unit (b : 16,000) $ 25 Required a. Finch has excess capacity and receives a special order for 4,000 clocks for $20 each Calculate the contribution margin per unit. Based on this, should Finch accept the special order? b. Prepare a contribution margin income statement for the special order. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a contribution margin income statement for the special order. FINCH COMPANY Contribution Margin Income Statement
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