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QS 25-18 Decision to accept additional business LO A1 Radar Company sells bikes for $400 each. The company currently sells 4,900 bikes per year and
QS 25-18 Decision to accept additional business LO A1 Radar Company sells bikes for $400 each. The company currently sells 4,900 bikes per year and could make as many as 7,000 bikes per year. The bikes cost $275 each to make; $170 in variable costs per bike and $105 of fixed costs per bike. Radar received an offer from a potential customer who wants to buy 800 bikes for $350 each. Incremental fixed costs to make this order are $33,600. No other costs will change if this order is accepted Compute Radar's additional income (ignore taxes) if it accepts this order. Incremental Incremental Incremental Amount per Fixed Income from New Unit Costs Business Sales 350 280,000 170 136,000 riable coslt Contribution margin S 33,600 ixed costs Incremental income (loss) from new business The company should
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