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QS 2 5 - 2 0 ( Algo ) Special offer pricing LO P 7 Radar Company sells bikes for $ 5 1 0 each.

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QS 25-20(Algo) Special offer pricing LO P7
Radar Company sells bikes for $510 each. The company currently sells 4,450 bikes per year and could make as many as 4,750 bikes per year. The bikes cost $280 each to make: $175 in variable costs per bike and $105 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 300 bikes for $500 each. Incremental fixed costs to make this order are $100 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?
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