Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Radar Company sells bikes for $410 each. The company currently sells 4,900 bikes per year and could make as many as 5,000 bikes per year.
Radar Company sells bikes for $410 each. The company currently sells 4,900 bikes per year and could make as many as 5,000 bikes per year. The bikes cost $250 each to make: $185 in variable costs per bike and $65 of fixed costs per bike. Radar received an offer from a potential customer who wants to buy 875 bikes for $360 each. Incremental fixed costs to make this order are $40,000. No other costs will change if this order is accepted. Compute Radar's additional income (ignore taxes) if it accepts this order. Incremental Incremental Amount per Fixed Unit Costs Incremental Income from New Business 185 Sales | $ 360 Variable cost Contribution margin $ 175 Fixed costs | $ 40,000 Incremental income (loss) from new business The company should 40,000 Accept the order
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