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.

Question

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.

Quizplus · Accepted Answer

The Answer of 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.

Fleming Company Had the Following Results of Operations for the Past