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mombefor78 mombefor78
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A month ago
Impala Industries manufactures a component used by car manufacturers. Impala can produce 1,000,000 components per year. A foreign car manufacturer has approached Impala with an offer to purchase 120,000 components at price of $6 per unit. Impala's results for last year are as follows:

Sales (900,000 at $8)$7,200,00
Variable costs2,700,000
Contribution margin4,500,000
Fixed costs2,350,000
Operating income$2,150,000

If Impala accepts the offer, it will only be able to sell 880,000 units at the regular price due to its capacity constraints. What will Impala's total operating income be next year if it accepts the offer?

▸ $2,710,000

▸ $2,650,000

▸ $4,760,000

▸ $2,410,000
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Managerial Accounting

Managerial Accounting


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jvigil33jvigil33
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$2,410,000

Variable cost per unit = $2,700,000 ÷ 900,000 = $3 per unit;
Regular Sales (880,000 × $8) - Variable costs (880,000 × $3) - Fixed costs $2,350,000 + Offer [($6 - 3) × 120,000] = $2,410,000
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