Radar Company sells bikes for $470 each. The company currently sells 4,300 bikes per year and could make as many as 4,650 bikes per year. The bikes cost $240 each to make: $180 in variable costs per bike and $60 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 350 bikes for $440 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?

Radar Company sells bikes for $470 each. The company currently sells 4,300 bikes per year and could make as many as 4,650 bikes per year. The bikes cost $240 each to make: $180 in variable costs per bike and $60 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 350 bikes for $440 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?

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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