Radar Company sells bikes for $520 each. The company currently sells 4,300 bikes per year and could make as many as 4,620 bikes per year. The bikes cost $265 each to make: $170 in variable costs per bike and $95 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 320 bikes for $500 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 Per Unit Total Contribution margin Income (b) The company should
Radar Company sells bikes for $520 each. The company currently sells 4,300 bikes per year and could make as many as 4,620 bikes per year. The bikes cost $265 each to make: $170 in variable costs per bike and $95 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 320 bikes for $500 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 Per Unit Total Contribution margin Income (b) The company should
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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