Fleming Company Had the Following Results of Operations for the Past

question 64

Essay

Fleming Company had the following results of operations for the past year: $\begin{array}{l}\text { Sales }(10,000 \text { units at } \$ 6.80) & \$ 68,000 \\\text { Materials and direct labor } & (20,000) \\\text { Overhead }(40 \% \text { variable) } & (10,000) \\\text { Selling and administrative expenses (all } & (6,000)\text { fixed) }\\\text { Operating income }&\$32,000\end{array}$
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:

League of Nations

An international organization established after World War I intended to maintain world peace and prevent future conflicts.

Senate

One of the two chambers of the United States Congress, responsible for making federal laws and composed of senators from each state.

Foreign Policy

A government's strategy in dealing with other nations, determining how they interact with other countries politically, economically, and militarily.

Woodrow Wilson

The 28th president of the United States (1913-1921), known for leading the country during World War I and for his efforts in shaping the post-war peace settlement, including the founding of the League of Nations.