23.13

Radar Company sells bikes for $490 each. The company currently sells 4,450 bikes per year and could make as many as 4,790 bikes per year. The bikes cost $300 each to make: $180 in variable costs per bike and $120 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 340 bikes for $480 each. Incremental fixed costs to make this order are $90 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