Question
Let's tackle another problem! Please don't feel overwhelmed with the number of questions I post- if you have done enough this week. you may leave
Let's tackle another problem! Please don't feel overwhelmed with the number of questions I post- if you have done enough this week. you may leave the questions for others. but you are also welcoming to make comments and contribute.
Elle Fanning's Corporate manufactures a component used by car manufacturers. Elle Fanning can produce 1,000,000 components per year. A foreign car manufacturer has approached Elle Fanning with an offer to purchase 120,000 components at price of $6 per unit. Elle Fanning '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 Elle Fanning accepts the offer, it will only be able to sell 880,000 units at the regular price due to its capacity constraints. What will Elle Fanning's total operating income be next year if it accepts the offer?
a. $2,710,000
b. $2,410,000
c. $2,650,000
d. $4,760,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started