FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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QS 23-15 Special offer LO P7
Radar Company sells bikes for $530 each. The company currently sells 4.150 bikes per year and could make as many as 4,450 bikes
per year. The bikes cost $265 each to make: $155 in variable costs per bike and $110 of fixed costs per bike. Radar received an offer
from a potential customer who wants to buy 300 bikes for $500 each. Incremental fixed costs to make this order are $41,000. No
other costs will change if this order is accepted.
Compute Radar's additional income (ignore taxes) if it accepts this order.
Contribution margin
Incremental
Amount per
Unit
Incremental income (loss) from new business
The company should
Incremental
Fixed
Costs
Incremental)
Income from New
Business
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Transcribed Image Text:QS 23-15 Special offer LO P7 Radar Company sells bikes for $530 each. The company currently sells 4.150 bikes per year and could make as many as 4,450 bikes per year. The bikes cost $265 each to make: $155 in variable costs per bike and $110 of fixed costs per bike. Radar received an offer from a potential customer who wants to buy 300 bikes for $500 each. Incremental fixed costs to make this order are $41,000. No other costs will change if this order is accepted. Compute Radar's additional income (ignore taxes) if it accepts this order. Contribution margin Incremental Amount per Unit Incremental income (loss) from new business The company should Incremental Fixed Costs Incremental) Income from New Business
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