106. Fleming Company had the following results of operations for the past year:
Sales (10,000 units at $6.80)
$ 68,000
Materials and direct labor
(20,000
)
Overhead (40% variable)
(10,000
Selling and administrative expenses (all fixed)
(6,000
Operating income
$ 32,000
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.
107. A company produces three different products that all require processing on the same machines. There are only 27,000 machine hours available in each year. Production information for each product is:
A
B
C
Sales price per unit
$20.00
$38.00
$35.00
Variable costs per unit
$12.00
$26.00
$17.00
Machine hours necessary to produce one unit
2.5
4.0
4.50
Required:a. Determine the preferred sales mix if there are no market constraints on any of the products.b. Determine the preferred sales mix if the demand is limited to 5,000 units for each product.c. Determine the preferred sales mix if the demand is limited to 3,000 units for each product.
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