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?
Radar Company sells bikes for $460 each. The company currently sells 4,350 bikes per year and could make as many as 4,750 bikes per year. The bikes cost $245 each to make: $175 in variable costs per bike and $70 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 400 bikes for $430 each. Incremental fixed costs to make this order are $90 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 $ 69 $ 69 $ Per Unit 430 $ 175 255 90 165 Accept special offer Total 172,000 70,000 102,000