Fleming Company Had the Following Results of Operations for the Past

question 93

Essay

Fleming Company had the following results of operations for the past year:
$\begin{array}{lr}\text { Sales (10,000 units at } \$ 6.80) & \$ 68,000 \\\text { Materials and direct labor } & (20,000) \\\text { Overhead (40\% variable) } & (10,000) \\\text { Selling and administrative expenses (all } & \underline {(6,000)} \\\text { fixed) } & \\ \text { Operating income } & \underline { \$ 32,000}\end{array}$ A foreign company (whose sales will not affect Fleming's regular sales)offers to buy 2,000 units at $5 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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