\\ ' ' . Andretti Company has a single product called a Oak. The company normally produces and sells 82,000 Daks each year at a selling . price of $58 per unit. The company's unit costs at this level of activity are given below: ' . ' \\ ' ' Dlrect materials 3 8.56 Direct: labor 11.06 Variable manufacturing overhead 1.86 Fixed manufacturing overhead - 16.80 ($820,989 total) , Variable selling expenses 3.76 ., . Fixed selling expenses -a.ae ($246,860 total) Total cost per unit ' $ 38.06 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: E . 1-a. Assume that Andretti Company has sufficient capacity to produce 102,500 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 82,000 units each year if it were willing to increase the xed selling expenses by $140,000. What is the financial advantage (disadvantage) of investing an additional $140,000 in xed selling expenses? 1-b. Would the additional investment bejustied? I} 2. Assume again that Andretti Company has sufcient capacity to produce 102,500 Daks each year. A customer in alforeign market wants to purchase 20,500 Daks. lf Andretti accepts this order it would have to pay import duties on the Oaks of $4.70 per unit and an additional $10,250 for permits and licenses. The only selling costs that would be associated with the order would be $1.30 per unit shipping cost. What is the breakeven price per unit on this order? ' 3. The company has 700 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 gure 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 Oaks. The strike is ,n expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the twomonth 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 30% of their normal level during the twomonth period and the fixed selling expenses would be reduced by 20% during the twomonth period. a. How much total contribution margin will Andretti forgo if it closes the plant for two months? b. How much total xed cost will the company avoid if it closes the plant for two months? c. What is the nancial advantage (disadvantage) of closing the plant for the two-month period? d. Should Andretti close the plant for two months