Payne Company, which produces and sells a small digital clock, bases its pricing strategy on a 35
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a. Payne has excess capacity and receives a special order for 4,000 clocks for $13 each. Calculate the contribution margin per unit; based on it, should Payne accept the special order?
b. Support your answer by preparing a contribution margin income statement for the specialorder.
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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