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Question
Goodfellow Company had the following results of operations for the past year:| Sales (8,000 units at $6.80) | $ 54,400 |
| Materials and direct labor | (20,000) |
| Overhead (40% variable) | (10,000) |
| Selling and administrative expenses (all fixed) | (6,000) |
| Operating income | $ 18,400 |
A foreign company (whose sales will not affect Goodfellow'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. Prepare an analysis of this additional business to show whether Goodfellow should take this order.
Answer
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