4 Problem 12-18 Relevant Cost Analysis in a Variety of Situations [L012-2, LO12-3, LO12-4) Andretti Company has a single product called a Dak. The company normally produces and sells 83,000 Daks each year at a selling price of $40 per unit. The company's unit costs at this level of activity are given below 571 $ 6.50 Direct labor Variable manufacturing overhead Fixed manufa 9.00 3.48 7.e0 ($581,e00 total) ng overhead 4.70 5.se (S456, 5e8 total) Fixed selling expenses Total cost per unit $ 36.10 A number of questions relating to the production and sale of Daks follow Each question is independent -a. Assume that Andretti Company has sufficient capacity to produce 103,750 Daks each year without any increase in fixed d costs. The company could increase its unit sales by 25% above the present 83,000 units each year if it were ing overhea manufa willing to increase the fixed selling expenses by $140.000. What is the financial advantage (disadvantage) of investing an additional $140.000 in fixed selling expenses? be 2 Assume again that Andretti Company has sufficient capacity to produce 103,750 Daks each year A customer in a foreign market wants to purchase 20750 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $170 per unit and ar it w additional $16,600 for permits and licenses. The only selling costs that would be associated with the order would be $2.00 per unit shipping cost. What is the break-even price per unit on this order? Ch 1-b. Would the additional investment be justified? 2 Assume again that Andretti Company has sufficient capacity to produce 103,750 Daks each year. A customer in a foreign market wants to purchase 20,750 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $170 per unit and an additional $16,600 for permits and licenses. The only selling costs that would be associated with the order would be $2.00 per unit shipping cost. What is the break-even price per unit on this order? 3. The company has 900 Daks on hand that have some irregular s and are therefore considered to be seconds."Due to the larities, it will be impossible to sell these units at the normal price through regular distribution channels. What is the unit cost e that is relevant for setting a minimum selling price? 4. Due to a strike in its supplier's plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 40% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two-month period a. How much total contribution margin will Andretti forgo if it closes the plant for two months? b. How much total fixed cost will the company avoid if it closes the plant for two months? c. What is the financial advantage (disadvantage) of closing the plant for the two-month period? d. Should Andretti close the plant for two months? outside manufacturer has offered to produce 83,000 Daks and ship them directly to Andretti's customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle: however, fixed manufacturing overh reduced by 30% Because tne outside manufacturer would payfor all shipping costs, the variable selling expenses would be only two thirds of their ead costs would be st per unit that it should compare to the price quoted by the outside te this question by entering your answers in the tabs below. Complete this question by cntering your answers in the ta Req 1A Req 18 Req 2 Req 3 Req 5 Req 4A to 4C Req 4D Assume that Andretti Company has sufficient capacity to produce 103,750 Daks each year without any increase in fixed manufacturing ad costs. The company could increase its unit sales by 25% above the present 83,000 units each year if it were willing to increase the fixed selling expenses by $140,000. What is the financial advantage (disadvantage) of investing an additional $140,000 in fixed selling expenses? Show lessA Req 1B > Req 4D Req 2 Req 3Req 4A to 4C Req 18 Req 1A Assume again that Andretti Company has soticient capacity to produce 103,750 Daks each year. A customer in a foreign market wants to purchase 20,750 Daks. If Andretti per unit and an additional $16,600 for permits and licenses. The only selling costs that would be associated with the order would be $2.00 per unit shipping cost. What is the break-even price per unit on this order? (Round your answers to 2 decimal places.) i accepts this order it would have to pay import duties on the Daks of $1.70 Req 3 ) Req 1B manufacturer? mplete this question by entering your answers in the tabs below. Req 5 Req 4D Req 2 Req 4A to 4C Req 1A Req 3 Req 1B The company has 900 Daks on hand that have some irregularities and are therefore considered to be "seconds." Due to the irregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What is the unit cost figure that is relevant for setting a minimum selling price? (Round your answer to 2 decimal places.) Req 4A to 4C > Req 2 ur answers in the tabs below Req 5 Req 1B Req 4D Req 2 Req 3 Req 4A to 4C Req 1A Due to a strike in its supplier's plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 40% of their normal level during the two month period and the fixed selling expenses would be reduced by 20% during the two-month period. (Round your intermediate calculations and final answers to 2 decimal places. Any losses/reductions should be indicated by a minus sign.) a. How much total contribution margin will Andretti forgo if it closes the plant for two months? b. How much total fixed cost will the company avoid if it closes the plant for two months? c. What is the financial advantage (disadvantage) of closing the plant for the two-month period? Show less A Forgone cont margin Req 3 Req 4D > Complete this question l ntering your answers in the tabs below. Req 5 Req 1A Req 1B Req 2 Req 4 Req 3Req 4A to 4C Reg 4D Indretti's customers. If Andretti An outside manufacturer has offered to produce 83,000 Daks and ship them dir Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling penses would be only two-thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare ex to the price quoted by the outside manufacturer? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Show less cost per unit K Req 4D