Exercise $6-9$A $($Algo$)$ Using the contribution margin approach for a special order decision LO $6-2$

Finch Company, which produces and sells a small digital clock, bases its pricing strategy on a $25$ percent markup on total cost. Based on annual production costs for $16,000$ units of product, computations for the sales price per clock follow.

$\backslash$table$[[$Unit$-$level costs,$ $240,000],[$Fixed costs,$80,000],[$Total cost $($a$),320,000],[$Markup $($a $\backslash$times $0\mathrm{.}25),80,000],[$Total sales $($b$),$$ $400,000],[$Sales price per unit $($b $16,000),$$ $25]]$

Required

a$.$ Finch has excess capacity and receives a special order for $4,000$ clocks for $$20$ each. Calculate the contribution margin per unit. Based on this, should Finch 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

Finch has excess capacity and receives a special order for $4,000$ clocks for $$20$ each. Calcu unit. Based on this, should Finch accept the special order?

Contribution margin per unit

Should Finch accept the special order?