Andretti Company has a single product called a Dak The company normally produces and sells 84 000 Daks each year at a selling price of $58 per unit The company's unit costs at this level of activity are given below Direct materials Dirwes labor Variable manufacturing overhead 68 50 10 00 Check my work PL ufacturing overhead Variable selling exp 2 20 7 00 15500,000 2 70 3 00 (8253,000 Tutal cost per unit 6 33 48 A number of questions relating to the production and sale of Deks follow Each question is independent Required 1 a Assume that Andretti Company has sufficient capacity to produce 105 000 Daks each year without any increase in fixed manufacturing overhead costs The company could increase its unit sales by 25 above the present 84,000 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 1 b Would the additional investment be justified 2 Assume again that Andretti Company has sufficient capacity to produce 105 000 Daks each year A customer in a foreign market wants to purchase 21,000 Daks If Andretti accepts this order it would have to pay import duties on the Daks of $4 70 per unit and an additional $10 500 for permits and licenses The only selling costs that would be associated with the order would be $2 30 per unit shipping cost What is the break even price per unit on this order 3 The company has 500 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 4 Due to a strike in its supplier's plant, Andretti Company is unable to purchase more material for the production of Daks The strikes 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 30 of their normal level during the fo 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 feed 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 period AS overhead costs would continue at 30 of 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 5 An outside manufacturer has offered to produce 84,000 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 overhead costs would be reduced by 30 Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two thirds of their present amount What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer Complete this question by entering your answers in the tabs below Req 1A Reg 15 Req 2 Req 3 Req 4A to 4C Req 4D Req 5 Assume that Andretti Company has sufficient capacity to produce 105,000 Daks each year without any increase in fixed manufacturing overhead costs The company could increase its unit sales by 25 above the present 84,000 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 advantage Req 18 Show less

Question

Andretti Company has a single product called a Dak  The company normally produces and sells 84 000 Daks each year at a selling price of $58 per unit  The company's unit costs at this level of activity are given below Direct materials Dirwes labor Variable manufacturing overhead 68 50 10 00 Check my work PL ufacturing overhead Variable selling exp 2 20 7 00 15500,000 2 70 3 00 (8253,000 Tutal cost per unit 6 33 48 A number of questions relating to the production and sale of Deks follow  Each question is independent Required  1 a  Assume that Andretti Company has sufficient capacity to produce 105 000 Daks each year without any increase in fixed manufacturing overhead costs  The company could increase its unit sales by 25  above the present 84,000 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  1 b  Would the additional investment be justified  2  Assume again that Andretti Company has sufficient capacity to produce 105 000 Daks each year  A customer in a foreign market wants to purchase 21,000 Daks  If Andretti accepts this order it would have to pay import duties on the Daks of $4 70 per unit and an additional $10 500 for permits and licenses  The only selling costs that would be associated with the order would be $2 30 per unit shipping cost  What is the break even price per unit on this order  3  The company has 500 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  4  Due to a strike in its supplier's plant, Andretti Company is unable to purchase more material for the production of Daks  The strikes 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 30  of their normal level during the fo 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 feed 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  period  AS overhead costs would continue at 30  of 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  5  An outside manufacturer has offered to produce 84,000 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 overhead costs would be reduced by 30   Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two  thirds of their present amount  What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer  Complete this question by entering your answers in the tabs below  Req 1A Reg 15 Req 2 Req 3 Req 4A to 4C Req 4D Req 5 Assume that Andretti Company has sufficient capacity to produce 105,000 Daks each year without any increase in fixed manufacturing overhead costs  The company could increase its unit sales by 25  above the present 84,000 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  advantage Req 18   Show less

Accepted Answer

The Answer is in the image, click to view ...

Andretti Company has a single product called a Dak. The company normally produces and sells 84.000 Daks each year at a selling price of $58

Step by Step Solution

Step: 1

Step: 2

Step: 3

Ace Your Homework with AI

Recommended Textbook for

Students explore these related Accounting questions