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.

Question

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.

Quizplus · Accepted Answer

The Answer of 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.

Fleming Company Had the Following Results of Operations for the Past