The Manufacturing Capacity of Jordan Company's Facilities Is 30,000 Units

question 144

Multiple Choice

The manufacturing capacity of Jordan Company's facilities is 30,000 units a year.A summary of operating results for last year follows:
$\begin{array}{|l|r|}\hline \text { Sales }(18,000 \text { units @ } \$ 100) & \$ 1,800,000 \\\hline \text { Variable Costs } & \$ 990,000 \\\hline \text { Contribution Margin } & \$ 810,000 \\\hline \text { Fixed Costs } & \$ 495,000 \\\hline \text { Operating Income } & \$ 315,000 \\\hline\end{array}$
A foreign distributor has offered to buy 15,000 units at $90 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.)

• A) $390,000.
• B) $705,000.
• C) $840,000.
• D) $855,000.

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Definitions:

Blepharoptosis

The drooping or falling of the upper eyelid, which can be due to various causes including muscle weakness, nerve damage, or congenital conditions.

Eyelids

Foldable covers that protect the eye, consisting of an upper and a lower flap, and capable of blinking.

Drooping

Sagging or hanging down loosely, often used to describe parts of the body, plants, or objects.

Iris

The colored part of the eye surrounding the pupil, controlling light levels entering the eye by adjusting the pupil size.