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Radar Company sells bikes for $530 each. The company currently sells 4,450 bikes per year and could make as many as 4,760 bikes per year. The bikes cost $245 each to make: $175 in variable costs per bike and $70 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 310 bikes for $510 each. Incremental fixed costs to make this order are $100 per bike. No other costs will change if this order is accepted.

Radar Company sells bikes for $530 each. The company currently sells 4,450 bikes per year and could make as many as 4,760 bikes per year. The bikes cost $245 each to make: $175 in variable costs per bike and $70 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 310 bikes for $510 each. Incremental fixed costs to make this order are $100 per bike. No other costs will change if this order is accepted.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Radar Company sells bikes for $530 each. The company currently sells 4,450 bikes per year and could make as many as 4,760 bikes per year. The bikes cost $245 each to make: $175 in variable costs per bike and $70 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 310 bikes for $510 each. Incremental fixed costs to make this order are $100 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 Contribution margin Income (b) The company should Per Unit Total
Transcribed Image Text:Radar Company sells bikes for $530 each. The company currently sells 4,450 bikes per year and could make as many as 4,760 bikes per year. The bikes cost $245 each to make: $175 in variable costs per bike and $70 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 310 bikes for $510 each. Incremental fixed costs to make this order are $100 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 Contribution margin Income (b) The company should Per Unit Total
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