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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