4.17 Keep or drop and constrained resource The income statement for King Salmon Sales, which Q3, Q5 produces smoked salmon, follows: Revenue (100,000 lbs.) Expenses $800,000 Fish $200,000 Smoking materials 20,000 Packaging materials 30,000 Labor (wages) 300,000 Administration 150,000 Sales commissions 10,000 Total expenses 710,000 $ 90,000 REQUIRED: Pretax income Assume that the administrative costs are fixed and that all of the other costs are variable. A. Suppose the state government curtails fishing because of low fish counts. As a result, King Salmon Sales can buy only 50,000 pounds of salmon this year. Assume that the selling price, the fixed costs, and the variable costs remain the same as last year. Using only quantitative information, should King Salmon operate this year? Explain your an- swer, using calculations. (Hint: Before you begin, identify the type of nonroutine operat- ing decision, the decision options, and the relevant information for this decision.) B. Assume King Salmon can buy up to 70,000 pounds of fish at $2.00 per pound and that the remainder of the fixed and variable costs remain the same as last year. Also assume that the selling price remains the same as last year and that the market will purchase at least another 30,000 pounds of fish. If the managers of King Salmon wish to sell more salmon, what should they be willing to pay to purchase more fish? [Hint: This type of decision is different from part (A). Before you begin, identify the type of nonroutine decision, the decision options, and the relevant information.]