Kirk Company sells bikes for $600 each. The company currently sells 7,500 bikes per year and could

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Kirk Company sells bikes for $600 each. The company currently sells 7,500 bikes per year and could make as many as 10,000 bikes per year. The bikes cost $450 each to make; $300 in variable costs per bike and $150 of fixed costs per bike. Kirk received an offer from a potential customer who wants to buy 1,500 bikes for $500 each. Incremental fixed costs to make this order are $100,000. No other costs will change if this order is accepted. Compute Kirk’s additional income (ignore taxes) if it accepts this order.

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Fundamental Accounting Principles

ISBN: 978-0078110870

20th Edition

Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta

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