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Compute the income for the special offer

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Reference no: EM133090050

Question - Radar Company sells bikes for $450 each. The company currently sells 4,350 bikes per year and could make as many as 4,700 bikes ' per year. The bikes cost $275 each to make: $195 in variable costs per bike and $80 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 350 bikes for $410 each. Incremental fixed costs to make this order are $90 per bike. No other costs will change if this order is accepted.

Required -

(a) Compute the Income for the special offer.

(b) Should Radar accept this offer?

Reference no: EM133090050

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