### Radar Company Bike Offer Analysis**Scenario**:Radar Company sells bikes for $450 each. Currently, they sell 4,500 bikes per year, with the capacity to make up to 4,870 bikes annually. The cost to make each bike is $230, broken down into $155 in variable costs and $75 in fixed costs. A potential customer offers to buy 370 bikes at $440 each. Accepting this order incurs incremental fixed costs of $70 per bike, with no other changes in cost.**Tasks**:(a) Compute the income for the special offer.(b) Decide if Radar should accept the offer.#### (a) Special Offer Analysis| | Per Unit | Total ||--------------------------|----------|-------|| **Revenue** | $440 | || **Variable Costs** | $155 | || **Incremental Fixed Costs** | $70 | || **Contribution Margin** | | || **Income** | 0 | |- **Note**: Fill in the missing values by calculating the details of the offer.#### (b) Decision| **The company should** | |- Consider the computation to determine whether the offer should be accepted.

The contribution margin represents the portion of a product's sales revenue that isn't used up by…

Answered: Radar Company sells bikes for $450…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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