Radar Company sells bikes for $500 each. The company currently sells 4,150 bikes per year and could make as many as 4,510 bikes per year. The bikes cost $300 each to make: $180 in variable costs per bike and $120 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 360 bikes for $460 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 Sales Variable costs Contribution margin Income (b) The company should $ Per Unit Total 460 $ 165,600 180 0

Radar Company sells bikes for $500 each. The company currently sells 4,150 bikes per year and could make as many as 4,510 bikes per year. The bikes cost $300 each to make: $180 in variable costs per bike and $120 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 360 bikes for $460 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 Sales Variable costs Contribution margin Income (b) The company should $ Per Unit Total 460 $ 165,600 180 0

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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Can you help with the CVP Drill #6?
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