Radar Company sells bikes for $490 each. The company currently sells 4,300 bikes per year and could make as many as 4,610 bikes per year. The bikes cost $250 each to make: $185 in variable costs per bike and $65 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 310 bikes for $450 each. Incremental fixed costs to make this order are $70 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Contribution margin Income (b) The company should Per Unit 0 Total
Radar Company sells bikes for $490 each. The company currently sells 4,300 bikes per year and could make as many as 4,610 bikes per year. The bikes cost $250 each to make: $185 in variable costs per bike and $65 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 310 bikes for $450 each. Incremental fixed costs to make this order are $70 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Contribution margin Income (b) The company should Per Unit 0 Total
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Radar Company sells bikes for $490 each. The company currently sells 4,300 bikes per year and could make as many as 4,610 bikes
per year. The bikes cost $250 each to make: $185 in variable costs per bike and $65 of fixed costs per bike. Radar receives an offer
from a potential customer who wants to buy 310 bikes for $450 each. Incremental fixed costs to make this order are $70 per bike. No
other costs will change if this order is accepted.
(a) Compute the income for the special offer.
(b) Should Radar accept this offer?
(a) Special offer analysis
Contribution margin
Income
(b) The company should
Per Unit
0
Total
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