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Hensely Company, which produces and sells a small digital clock, bases its pricing strategy on a 25 percent markup on total cost. Based on annual
Hensely 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 17,000 units of product, computations for the sales price per clock follow. Unit-level costs Fixed costs Total cost (a) Markup (a x 0.25) Total sales (b) $408,000 68,000 476,000 119,000 $595,000 Sales price per unit (b + 17,000) $ 35 Required a. Hensely has excess capacity and receives a special order for 8,000 clocks for $27 each. Calculate the contribution margin per unit. Based on this, should Hensely 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 Hensely has excess capacity and receives a special order for 8,000 clocks for $27 each. Calculate the contribution margin per unit. Based on this, should Hensely accept the special order? Contribution margin per unit Should Hensely accept 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. HENSELY COMPANY Contribution Margin Income Statement Incremental revenue Variable costs Contribution to profit
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