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Sheridan Industries manufactures a component used by car manufacturers. Sheridan can produce 1036000 components per year. A foreign car manufacturer has approached Sheridan with an
Sheridan Industries manufactures a component used by car manufacturers. Sheridan can produce 1036000 components per year. A foreign car manufacturer has approached Sheridan with an offer to purchase 138000 components at price of $6 per unit. Sheridan's results for last year are as follows: Sales (918000 at $8) $7344000 Variable costs 2754000 Contribution margin 4590000 Fixed costs 2368000 Operating income $2222000 If Sheridan accepts the offer, it will only be able to sell 898000 units at the regular price due to its capacity constraints. What will Sheridan's total operating income be next year if it accepts the offer? O $2890000 O $4904000 O $2536000 O $2812000
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