Radar Company sells bikes for $490 each. The company currently sells 4,200 bikes per year and could make as many as 4,580 bikesper year. The bikes cost $255 each to make: $190 in variable costs per bike and $65 of fixed costs per bike. Radar received an offerfrom a potential customer who wants to buy 380 bikes for $460 each. Incremental fixed costs to make this order are $46,000. Noother costs will change if this order is accepted.Compute Radar's additional income (ignore taxes) if it accepts this order.IncrementalAmount perUnitIncrementalFixedCostsIncrementalIncome from NewBusinessContribution marginIncremental income (loss) from new businessThe company should

Step 1:Computation of the additional income (loss), if the company accepts the special offer:…

Answered: Radar Company sells bikes for $490…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 54P

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Radar Company sells bikes for $510 each. The company currently sells 4,200 bikes per year and could make as many as 4,580 bikes per year. The bikes cost $255 each to make: $180 in variable costs per bike and $75 of fixed costs per bike. Radar received an offer from a potential customer who wants to buy 380 bikes for $490 each. Incremental fixed costs to make this order are $46,000. No other costs will change if this order is accepted. Compute Radar's additional income (ignore taxes) if it accepts this order. Incremental Amount per Unit Incremental Incremental Income from New Business Fixed Costs Contribution margin Incremental income (loss) from new business The company should

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