The manufacturing capacity of Jordan Company's facilities is 30,000 units a year. A summary of operating results for last year follows:

Sales (18,000 units @ $109)	$1,962,000
Variable Costs	$950,000
Contribution Margin	$1,012,000
Fixed Costs	$489,000
Operating Income	$523,000

A foreign distributor has offered to buy 15,000 units at $99 per unit next year. Jordan expects its regular sales next year to be 18,000 units. If Jordan accepts this offer and rejects some business from regular customers so as not to exceed capacity, what would be the total operating income next year? (Assume that the total fixed costs would be the same no matter how many units are produced and sold.)

Question 2Answer

a.

$745,667

b.

$535,000

c.

$1,047,667

d.

$828,380