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Andretti Company has a single product called a Dak. The company normally produces and sells 90,000 Daks each year at a selling price of $48
Andretti Company has a single product called a Dak. The company normally produces and sells 90,000 Daks each year at a selling price of $48 per unit. The company's unit costs at this level of activity are given below: $ 7.50 10.00 3.00 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit 9.00 ($810,000 total) 3.70 4.50 ($405,000 total) $ 37.70 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume that Andretti Company has sufficient capacity to produce 117,000 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 30% above the present 90,000 units cach year if it were willing to increase the fixed selling expenses by $120,000. Calculate the incremental net operating income. (Round your answers to the nearest whole number.) Increased sales in units Contribution margin per unit Incremental contribution margin Less added foxed selling expense Incremental net operating income 1-b. Would the increased fixed selling expenses be justified? O No O Yes 2. Assume again that Andretti Company has sufficient capacity to produce 117,000 Daks each year. A customer in a foreign market wants to purchase 27,000 Daks. Import duties on the Daks would be $2.70 per unit, and costs for permits and licenses would be $16,200. The only selling costs that would be associated with the order would be $2.20 per unit shipping cost. Compute the per unit break-even price on this order. (Round your answers to 2 decimal places.) Variable manufacturing cost per unit Import duties per unit Permits and licenses Shipping cost per unit Break-even price per unit
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