8 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 $54 per unit. The company's unit costs at this level of activity are given below. ts 004347 Direct saterials Direct Labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit 3 7.50 9.00 3.20 9.00 (5747,00 total) 3.78 3.09 (5249,000 total) $35.40 BOOK ASK Prire rences A number of questions relating to the production and sale of Daks follow. Each question is independent Required: 1-0. Assume that Andretti Company has sufficient capacity to produce 107.900 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 83,000 units each year 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 foxed selling expenses? 1-b. Would the additional Investment be justified? 2. Assume again that Andretti Company has sufficient capacity to produce 107,900 Daks each year. A customer in a foreign market wants to purchase 24,900 Doks, If Andretti accepts this order it would have to pay Import duties on the Daks of $3.70er unit and on additional $12.450 for permits and licenses. The only selling costs that would be associated with the order would be 54.80 per unit Shipping cost What is the break-even price per unit on this order? 3. The company has 600 Daks on hand that have some rregulanties 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. Wnot the unit cost figure that is relevant for setting a minimum selling price? 4. Due to a strike in its supplier's plant. Andrett Companys unable to purchase more material for the production of Daks. The strikels expected to last for two months. Andretti Company has enough material on hand to operate : 25% of coronal levels for the two-month period. As an alternative. Andrett could close les plant down entirely for the two months the plant were closed, fed manufacturing overhead costs would continue st 30% of their formal level during the two-month period and the fixed sewing expenses would be reduced by 20% during the two month period a. How much total contribution margin wit Andrett fargo ift closes the plant for two months? D. How much total fixed cost will the company avoid it closes the plant for two months What is the financial advantage (disadvantage of closing the plant to the two-month period? d. Should Andrett close the oldt foc two monto