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Radar Company sells bikes for $530 each. The company currently sells 4,400 bikes per year and could make as many as 4,790 bikes per year.
Radar Company sells bikes for $530 each. The company currently sells 4,400 bikes per year and could make as many as 4,790 bikes per year. The bikes cost $285 each to make: $185 in variable costs per bike and $100 of fixed costs per bike. Radar received an offer from a potential customer who wants to buy 390 bikes for $520 each. Incremental fixed costs to make this order are $44,000. No other costs will change if this order is accepted. Compute Radar's additional income (ignore taxes) if it accepts this order. Incremental Amount per Unit Incremental Fixed Costs Incremental Income from New Business Sales Variable cost Contribution margin Fixed costs Incremental income (loss) from new business The company should
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