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Perez Company, which produces and sells a small digital clock, bases its pricing strategy on a 25 percent markup on total cost. Based on annual
Perez 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 Fixed costs Total cost (a) Markup (a x 0.25) Total sales (b) $196,000 84,000 280,000 70,000 $350,000 Sales price per unit (b + 14,000) $ 25 Required a. Perez has excess capacity and receives a special order for 3,000 clocks for $17 each. Calculate the contribution margin per unit. Based on this, should Perez accept the special order? b. Prepare a contribution margin income statement for the special order. ces Complete this question by entering your answers in the tabs below. Required A Required B Perez has excess capacity and receives a special order for 3,000 clocks for $17 each. Calculate the contribution margin per unit. Based on this, should Perez accept the special order? Contribution margin per unit Should Perez 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. PEREZ COMPANY Contribution Margin Income Statement < Required A Required B
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