Answer Happy

Radar Company sells bikes for $460 each. The company currentlysells 4,350 bikes per year and could make as many as 4,750 bikesper year. The bikes cost $245 each to make: $175 in variable costsper bike and $70 of fixed costs per bike. Radar receives an offerfrom a potential customer who wants to buy 400 bikes for $430 each.Incremental fixed costs to make this order are $90 per bike. Noother costs will change if this order is accepted.(a) Compute the income for the specialoffer.(b) Should Radar accept this offer?
Rory Company has an old machine with a book value of $81,000 and a remaining five-year useful life. Rory is considering purchasing a new machine at a price of $107,000. Rory can sell its old machine now for $80,000. The old machine has variable manufacturing costs of $37,000 per year. The new machine will reduce variable manufacturing costs by $14,800 per year over its five-year useful life. (a) Prepare a keep or replace analysis of income effects for the machines. (b) Should the old machine be replaced? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a keep or replace analysis of income effects for the machines. Keep or Replace Analysis Revenues Sale of existing machine Costs Purchase of new machine Variable manufacturing costs Income (loss) Keep 0 $ 80,000 $ $ 185,000 $ (185,000) 0 Replace Required A 107,000 111,000 Income Increase (Decrease) if replaced Required B >