Goodfellow Company had the following results of operations for the past year:
$$\begin{array} { l | l }
\text { Sales (8,000 units at \$6.80) } & \$ 54,400 \
\hline \text { Materials and direct labor } & ( 20,000 ) \
\hline \text { Overhead (40\% variable) } & ( 10,000 ) \
\hline \text { Selling and administrative expenses (all fixed) } & ( 6,000 ) \
\hline \text { Operating income } & \$ 18,400 \
\hline
\end{array}$$ 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.

Question

Goodfellow Company had the following results of operations for the past year:
 $$\begin{array} { l | l } 
\text { Sales (8,000 units at \$6.80) } & \$ 54,400 \
\hline \text { Materials and direct labor } & ( 20,000 ) \
\hline \text { Overhead (40\% variable) } & ( 10,000 ) \
\hline \text { Selling and administrative expenses (all fixed) } & ( 6,000 ) \
\hline \text { Operating income } & \$ 18,400 \
\hline
\end{array}$$ 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.

Quizplus · Accepted Answer

The Answer of Goodfellow Company had the following results of operations for the past year:
 $$\begin{array} { l | l } 
\text { Sales (8,000 units at \$6.80) } & \$ 54,400 \
\hline \text { Materials and direct labor } & ( 20,000 ) \
\hline \text { Overhead (40\% variable) } & ( 10,000 ) \
\hline \text { Selling and administrative expenses (all fixed) } & ( 6,000 ) \
\hline \text { Operating income } & \$ 18,400 \
\hline
\end{array}$$ 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.

Goodfellow Company Had the Following Results of Operations for the Past