10.8

Radar Company sells bikes for $500 each. The company currently sells 4,500 bikes per year and could make as many as 4,800 bikes per year. The bikes cost $270 each to make: $195 in variable costs per bike and $75 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 300 bikes for $470 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? Answer is not complete