Starfax, Inc., manufactures a small part that is widely used in various electronic products such as home computers.

	Year 1		Year 2		Year 3
Sales	$	1,100,000	$	880,000	$	1,100,000
Cost of goods sold		860,000		608,000		910,000
Gross margin		240,000		272,000		190,000
Selling and administrative expenses		220,000		190,000		220,000
Net operating income (loss)	$	20,000	$	82,000	$	(30,000)

In the latter part of Year 2, a competitor went out of business and in the process dumped a large number of units on the market. As a result, Starfax