Fleming Company Had the Following Results of Operations for the Past

question 92

Essay

Fleming Company had the following results of operations for the past year:
$$\begin{array} { l r } \text { sales } ( 10,000 \text { units at } \$ 6.80 ) & \$ 68,000 \\\text { Materials and direct labor } & ( 20,000 ) \\\text { Overhead (40\% variable) .......................... } & ( 10,000 ) \\\text { Selling and adruinistrative expenses (all fixed) } & ( 6,000 ) \\\text { Operating income } & \$ 32,000\end{array}$$ A foreign company (whose sales will not affect Fleming's regular sales)offers to buy 2,000 units at $5.00 per unit.In addition to variable manufacturing costs,there would be shipping costs of $1,200 in total on these units.Should Fleming take this order?
Explain.

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Definitions:

Introductory Stage

The initial phase of a product life cycle when a product is launched to the market, characterized by marketing efforts to establish its presence.

Marketing Program

A coordinated, comprehensive plan that identifies and specifies strategies and tactics for achieving marketing objectives.

Product Life Cycle

The advancement of a product through various phases that include its introduction, growth, maturation, and eventual decline.

Growth

An increase in some quantity over time, such as revenue, size, or population.