Exercise 13-9A (Static) Using the contribution margin approach for a special order decision LO 13-2 Hensely 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 25,000 units of product, computations for the sales price per clock follow. Unit-level costs Fixed costs Total cost (a) Markup (a x 0.25) Total sales (b) Sales price per unit (b ÷ 25,000) Required $240,000 60,000 300,000 75,000 $375,000 $15 a. Hensely has excess capacity and receives a special order for 8,000 clocks for $12 each. Calculate the contribution margin per unit. Based on this, should Hensely 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 Required B Hensely has excess capacity and receives a special order for 8,000 clocks for $12 each unit. Based on this, should Hensely accept the special order? Note: Round your answer to 2 decimal places. Contribution margin per unit Should Hensely accept the special order? < Required A Required B >
Exercise 13-9A (Static) Using the contribution margin approach for a special order decision LO 13-2 Hensely 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 25,000 units of product, computations for the sales price per clock follow. Unit-level costs Fixed costs Total cost (a) Markup (a x 0.25) Total sales (b) Sales price per unit (b ÷ 25,000) Required $240,000 60,000 300,000 75,000 $375,000 $15 a. Hensely has excess capacity and receives a special order for 8,000 clocks for $12 each. Calculate the contribution margin per unit. Based on this, should Hensely 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 Required B Hensely has excess capacity and receives a special order for 8,000 clocks for $12 each unit. Based on this, should Hensely accept the special order? Note: Round your answer to 2 decimal places. Contribution margin per unit Should Hensely accept the special order? < Required A Required B >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Exercise 13-9A (Static) Using the contribution margin approach
for a special order decision LO 13-2
Hensely 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 25,000 units of product, computations for the sales price per clock follow.
Unit-level costs
Fixed costs
Total cost (a)
Markup (a x 0.25)
Total sales (b)
Sales price per unit (b÷ 25,000)
Required
$240,000
60,000
300,000
75,000
$375,000
$15
a. Hensely has excess capacity and receives a special order for 8,000 clocks for
$12 each. Calculate the contribution margin per unit. Based on this, should
Hensely 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 Required B
Hensely has excess capacity and receives a special order for 8,000 clocks for $12 each
unit. Based on this, should Hensely accept the special order?
Note: Round your answer to 2 decimal places.
Contribution margin per unit
Should Hensely accept the special order?
< Required A
Required B
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education