FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Radar Company sells bikes for $490 each. The company currently sells 4,150 bikes per year and could make as many as 4,490 bikes
per year. The bikes cost $300 each to make: $175 in variable costs per bike and $125 of fixed costs per bike. Radar receives an offer
from a potential customer who wants to buy 340 bikes for $470 each. Incremental fixed costs to make this order are $60 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
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Transcribed Image Text:Radar Company sells bikes for $490 each. The company currently sells 4,150 bikes per year and could make as many as 4,490 bikes per year. The bikes cost $300 each to make: $175 in variable costs per bike and $125 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 340 bikes for $470 each. Incremental fixed costs to make this order are $60 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
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