Radar Company sells bikes for $540 each. The company currently sells 4,400 bikes per year and could make as many as 4,750 bik per year. The bikes cost $250 each to make: $160 in variable costs per bike and $90 of fixed costs per bike. Radar receives an offe from a potential customer who wants to buy 350 bikes for $510 each. Incremental fixed costs to make this order are $90 per bike. M other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer?
Radar Company sells bikes for $540 each. The company currently sells 4,400 bikes per year and could make as many as 4,750 bik per year. The bikes cost $250 each to make: $160 in variable costs per bike and $90 of fixed costs per bike. Radar receives an offe from a potential customer who wants to buy 350 bikes for $510 each. Incremental fixed costs to make this order are $90 per bike. M other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 16E
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