Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Radar Company sells bikes for $500 each. The company currently sells 4150 bikes per year and could make as many as 4.460 bikes per year.
Radar Company sells bikes for $500 each. The company currently sells 4150 bikes per year and could make as many as 4.460 bikes per year. The bikes cost $225 each to make: $170 in variable costs per bike and $55 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 310 bikes for $470 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 Radar accept this offer? Answer is not complete. (a) Special offer analysis Per Unit Total Sales $ 470 $ 145.700 Variable costs 170 52,700 Contribution margin S 300 93,000 Fixed costs (incremental) 80 Income 220 $ 92,920 (b) The company should Accept special offer
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