Question: Using the contribution margin approach for a special order decision Gonzalez Company produces and sells a food processor that it prices at a 25 percent

Using the contribution margin approach for a special order decision Gonzalez Company produces and sells a food processor that it prices at a 25 percent markup on total cost. Based on data pertaining to producing and selling 40,000 food processors, Gonzalez computes the sales price per food processor as follows.

Required

a. Gonzalez receives a special order for 7,000 food processors for $19 each. Gonzalez has excess capacity. Calculate the contribution margin per unit for the special order. Based on the contribution margin per unit, should Gonzalez accept the special order?

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

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