Question
Radar Company sells bikes for $350 each. The company currently sells 4,200 bikes per year and could make as many as 5,000 bikes per year.
Radar Company sells bikes for $350 each. The company currently sells 4,200 bikes per year and could make as many as 5,000 bikes per year. The bikes cost $270 each to make; $155 in variable costs per bike and $115 of fixed costs per bike. Radar received an offer from a potential customer who wants to buy 775 bikes for $380 each. Incremental fixed costs to make this order are $51,000. No other costs will change if this order is accepted. Compute Radars additional income (ignore taxes) if it accepts this order.
incremental amount per unit | incremental fixed costs | incremental income from new business | |
sales | $350 | ?? | |
variable costs | 195 | ?? | |
contribution margin | ?? | ?? | |
fixed costs | $40,000 | $40,000 | |
incremental income (loss) | ?? | ||
the company should | ?? |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started