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Bike Company sells bikes for $540 each. The company currently sells 4,250 bikes per year and could make as many as 4,590 bikes per year.
Bike Company sells bikes for $540 each. The company currently sells 4,250 bikes per year and could make as many as 4,590 bikes per year. The bikes cost $240 each to make: $185 in variable costs per bike and $55 of fixed costs per bike. The company receives an offer from a potential customer who wants to buy 340 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 the company accept this offer?
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