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Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of
Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $58 per unit. The company's unit costs at this level of activity follow: Direct materials $19.00 Direct labour 13.50 Variable manufacturing overhead 11.30 Fixed manufacturing overhead 5.00 $435,000 total Variable selling expenses 3.90 Fixed selling expenses Total cost per unit 3.50 $56.20 $304,500 total A number of questions relating to the production and sale of Daks follow. Consider each question separately. Required: 1. Assume that Andretti Company has sufficient capacity to produce 150,000 Daks every year without any increase in fixed manufacturing overhead costs. The company currently produces and sells 87,000 units each year. However, it plans to increase the fixed selling expenses by $30,625 in order to increase sales. By how much should sales increase in order to justify the additional $30,625? Please compute the percentage increase in sales. (Do not round intermediate calculations. Round up your "units" answers to the nearest whole number and percentage answer to 2 decimal places.) Increase in sales units Percentage increase in sales %
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