Answer Happy

Radar Company sells bikes for $460 each. The company currently sells 4,100 bikes per year and could make as many as 4,490 bikes per year. The bikes cost $285 each to make: $155 in variable costs per bike and $130 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 390 bikes for $440 each. Incremental fixed costs to make this order are $100 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? (a) Special offer analysis Sales Variable costs Contribution margin Fixed costs (incremental) Income (b) The company should Answer is not complete. Per Unit Total $ $ 420 (170) 250 (100) 350 $ Accept special offer 150