Question
13....IvanhoeIndustries manufactures a component used by car manufacturers.Ivanhoecan produce1030000components per year. A foreign car manufacturer has approachedIvanhoewith an offer to purchase135000components at price of $6per
13....IvanhoeIndustries manufactures a component used by car manufacturers.Ivanhoecan produce1030000components per year. A foreign car manufacturer has approachedIvanhoewith an offer to purchase135000components at price of $6per unit.Ivanhoe's results for last year are as follows:
Sales (915000 at $8) $7320000
Variable costs 2745000
Contribution margin 4575000
Fixed costs 2365000
Operating income $2210000
IfIvanhoeaccepts the offer, it will only be able to sell895000units at the regular price due to its capacity constraints. What willIvanhoe's total operating income be next year if it accepts the offer?
a..$2860000
b...$4880000
c...$2785000
d...$2515000
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