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Cullumber Industries manufactures a component used by car manufacturers. Cullumber can produce 1050000 components per year. A foreign car manufacturer has approached Cullumber with an

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Cullumber Industries manufactures a component used by car manufacturers. Cullumber can produce 1050000 components per year. A foreign car manufacturer has approached Cullumber with an offer to purchase 145000 components at price of $6 per unit. Cullumber's results for last year are as follows: Sales (925000 at $8) $7400000 Variable costs Contribution margin 4625000 Fixed costs 2375000 Operating income $2250000 2775000 If Cullumber accepts the offer, it will only be able to sell 905000 units at the regular price due to its capacity constraints. What will Cullumber's total operating income be next year if it accepts the offer? $2875000 $4960000 $2585000 $2960000

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