QS $23-20($Algo$)$ Special offer pricing LO P$7$

$1$ points

$$

References

Radar Company sells bikes for $$530$ each. The company currently sells $4,150$ bikes per year and could make as many as $4,500$ bikes per year. The bikes cost $$250$ each to make: $$180$ in variable costs per bike and $$70$ of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy $350$ bikes for $$490$ each. Incremental fixed costs to make this order are $$80$ 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?

$\backslash$table$[[($a$)$ Special offer analysis,Per Unit,Total$],[$Sales$,$$$,490,$$$,171,500],[$Variable costs,,$180,,63,000],[$Contribution margin,$$,310,,108,500],[$Fixed costs $($incremental$),,,,],[$Income $r,,310,,],[($b$)$ The company should,,,,$]]$