25.3, 4, 5

fixed costs are avoidable. (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? Complete this question by entering your answers in the tabs below. Compute the income increase or decrease from eliminating this segment. Radar Company sells bikes for $540 each. The company currently sells 4,250 bikes per year and could make as many as 4,630 bikes per year. The bikes cost $275 each to make: $180 in variable costs per bike and $95 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 380 bikes for $510 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? Beto Company pays $5.90 per unit to buy a part for one of the products it manufactures. With excess capacity, the company is considering making the part. Making the part would cost $6.30 per unit for direct materials and $1.00 per unit for direct labor. The company normally applies overhead at the predetermined rate of 200% of direct labor cost. Incremental overhead to make the part would be 80% of direct labor cost. (a) Prepare a make or buy analysis of costs for this part. Note: Enter your answers rounded to 2 decimal places. (b) Should Beto make or buy the part