Question: Using the contribution margin approach for a special order decision Griffin Company, which produces and sells a small digital clock, bases its pricing strategy on

Using the contribution margin approach for a special order decision Griffin Company, which produces and sells a small digital clock, bases its pricing strategy on a 30 percent markup on total cost. Based on annual production costs for 25,000 units of product, computations for the sales price per clock follow.

Required

a. Griffin has excess capacity and receives a special order for 6,000 clocks for $10 each. Calculate the contribution margin per unit; based on it, should Griffin accept the special order?

b. Support your answer by preparing a contribution margin income statement for the special order.

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