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Blossom Industries manufactures a component used by car manufacturers. Blossom can produce 1024000 components per year. A foreign car manufacturer has approached Blossom with an

Blossom Industries manufactures a component used by car manufacturers. Blossom can produce 1024000 components per year. A foreign car manufacturer has approached Blossom with an offer to purchase 132000 components at price of $6 per unit. Blossoms results for last year are as follows:

Sales (912000 at $8)

$7296000

Variable costs

2736000

Contribution margin

4560000

Fixed costs

2362000

Operating income

$2198000

If Blossom accepts the offer, it will only be able to sell 892000 units at the regular price due to its capacity constraints. What will Blossoms total operating income be next year if it accepts the offer?

a. $4856000

b. $2830000

c. $2758000

d. $2494000

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