Impala Industries manufactures a component used by car manufacturers. Impala can produce 1,000,000 components per year. A foreign car manufacturer has approached Impala with an offer to purchase 120,000 components at price of $6 per unit. Impala's results for last year are as follows: Sales (900,000 at $8) $7,200,000 Variable costs 2,700,000 Contribution margin 4,500,000 Fixed costs 2,350,000 Operating income $2,150,000 If Impala accepts the offer, it will only be able to sell 880,000 units at the regular price due to its capacity constraints. What will Impala's total operating income be next year if it accepts the offer? Select one: a. $2,710,000 b. $2,410,000 c. $2,650,000 d. $4,760,000
Impala Industries manufactures a component used by car manufacturers. Impala can produce 1,000,000 components per year. A foreign car manufacturer has approached Impala with an offer to purchase 120,000 components at price of $6 per unit. Impala's results for last year are as follows:
Sales (900,000 at $8)
$7,200,000
Variable costs
2,700,000
Contribution margin
4,500,000
Fixed costs
2,350,000
Operating income
$2,150,000
If Impala accepts the offer, it will only be able to sell 880,000 units at the regular price due to its capacity constraints. What will Impala's total operating income be next year if it accepts the offer?
Select one:
a. $2,710,000
b. $2,410,000
c. $2,650,000
d. $4,760,000
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