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Sandhill Industries manufactures a component used by car manufacturers. Sandhill can produce 1020000 components per year. A foreign car manufacturer has approached Sandhill with an
Sandhill Industries manufactures a component used by car manufacturers. Sandhill can produce 1020000 components per year. A foreign car manufacturer has approached Sandhill with an offer to purchase 130000 components at price of $6 per unit. Sandhill's results for last year are as follows: Sales (910000 at $8) $7280000 Variable costs 2730000 Contribution margin 4550000 Fixed costs 2360000 Operating income $2190000 If Sandhill accepts the offer, it will only be able to sell 890000 units at the regular price due to its capacity constraints. What will Sandhill's total operating income be next year if it accepts the offer? Select answer from the options below $2810000 $2740000 $2480000 $4840000
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