Good fellow 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 Good fellow'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 Good fellow should take this order.