Goodfellow Company Had the Following Results of Operations for the Past

Essay

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.