Levels Tought:
Elementary,Middle School,High School,College,University,PHD
Teaching Since: | May 2017 |
Last Sign in: | 307 Weeks Ago, 4 Days Ago |
Questions Answered: | 66690 |
Tutorials Posted: | 66688 |
MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Exercise 13-7Â Â Â Using the contribution margin approach for a special order decision
Shenyang Company, which produces and sells a small digital clock, bases its pricing strategy on a 35 percent markup on total cost. Based on annual production costs for 10,000 units of product, computations for the sales price per clock follow.
Â
Â
Unit-level costs |
$150,000 |
Fixed costs |
   50,000 |
Total cost (a) |
200,000 |
Markup (a 3 0.35) |
   70,000 |
Total sales (b) |
$270,000 |
Sales price per unit (b 4 10,000) |
$27 |
Â
Required
a.    Shenyang has excess capacity and receives a special order for 4,000 clocks for $17 each. Calculate the contribution margin per unit; based on it, should Shenyang accept the special order?
b.    Support your answer by preparing a contribution margin income statement for the special order.
Â
Hel-----------lo -----------Sir-----------/Ma-----------dam-----------Tha-----------nk -----------You----------- fo-----------r u-----------sin-----------g o-----------ur -----------web-----------sit-----------e a-----------nd -----------acq-----------uis-----------iti-----------on -----------of -----------my -----------pos-----------ted----------- so-----------lut-----------ion-----------.Pl-----------eas-----------e p-----------ing----------- me----------- on-----------cha-----------t I----------- am----------- on-----------lin-----------e o-----------r i-----------nbo-----------x m-----------e a----------- me-----------ssa-----------ge -----------I w-----------ill----------- be-----------