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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
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 (b) $ 130,000 70,000 200,000 40,000 $ 240,000 Sales price per unit (b + 10,000) $ 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 Required 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?
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