Radar Company sells bikes for $520 each. The company currently sells 4,150 bikes per year and...
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Radar Company sells bikes for $520 each. The company currently sells 4,150 bikes per year and could make as many as 4,490 bikes per year. The bikes cost $280 each to make: $165 in variable costs per bike and $115 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 340 bikes for $480 each. Incremental fixed costs to make this order are $90 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 Per Unit Total $ 480 165 Contribution margin Fixed costs (incremental) $ 90 Income 90 (b) The company should Radar Company sells bikes for $520 each. The company currently sells 4,150 bikes per year and could make as many as 4,490 bikes per year. The bikes cost $280 each to make: $165 in variable costs per bike and $115 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 340 bikes for $480 each. Incremental fixed costs to make this order are $90 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 Per Unit Total $ 480 165 Contribution margin Fixed costs (incremental) $ 90 Income 90 (b) The company should
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