Radar Company sells bikes for $480 each. The company currently sells 5,100 bikes per year...
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Radar Company sells bikes for $480 each. The company currently sells 5,100 bikes per year and could make as many as 5,000 bikes per year. The bikes cost $240 each to make: $190 in variable costs per bike and $50 of fixed costs per bike. Radar received an offer from a potential customer who wants to buy 875 bikes for $440 each. Incremental fixed costs to make this order are $42,000. No other costs will change if this order is accepted. Compute Radars additional income (ignore taxes) if it accepts this order. Incremental Income from New Business Incremental Incremental Amount per Fixed Unit Costs Sales $ 440 Variable cost 190 Contribution margin Fixed costs Incremental income (loss) from new business The company should
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