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Solomon Company, which produces and sells a small digital clock, bases its pricing strategy on a 20 percent markup on total cost. Based on annual
Solomon Company, which produces and sells a small digital clock, bases its pricing strategy on a 20 percent markup on total cost. Based on annual production costs for 10,000 units of product, computations for the sales price per clock follow. Unit-level costs Fixed costs Total cost (a) Markup (a x 0.20) Total sales (6) Sales price per unit (b = 10,000) $130,000 70,000 200,000 40,000 $240,000 $ 24 Required a. Solomon has excess capacity and receives a special order for 8,000 clocks for $18 each. Calculate the contribution margin per unit. Based on this, should Solomon 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 B Solomon has excess capacity and receives a special order for 8,000 clocks for $18 each. Calculate the contribution margin per unit. Based on this, should Solomon accept the special order? Contribution margin per unit Should Solomon 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. SOLOMON COMPANY Contribution Margin Income Statement
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