A

Andretti Company has a single product called a Dak. The company normally produces and sells 60,000 Daks each year at a selling price of $32 per unit. The company's unit costs at this level of activity are glven below: 10.00 Direct materials Direct labor Variable manufacluring overhead Fixed manufacturing overhead Variable selling expenses Fixed seilling expenses Total cost per unit 4.50 2.30 5 00 ($300,000 total) 1.20 3.50 ($210,000 total) 26.50 A number of questions relating to the praduction and sale of Daks follow. Each question is independent. Required 1-a. Assume that Andretti Company has sufficient capacity to produce 90,000 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 25% above the present 60,000 units each year if it were willing to increase the fixed selling expenses by $80,000. Calculate the incremental net operating income. Increased sales in units 15,000 14 $210,000 80,000 $ 130,000 Contribution margin per u nit Less added fixed selling expense Incremernlial nel operaling incorrie