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 $62 per unit. The company's unit costs at this level of activity are given below: Direct materials $ 8.50 Direct labor 9.60 Variable manufacturing overhead 3.80 Fixed manufacturing overhead 3.60 ($261,660 total) Variable selling expenses 3.?0 Fixed selling expenses 3-50 ($364,560 total) Total cost per unit 5 33-?3 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1a. Assume that Andretti Company has sufcient capacity to produce 104,400 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 20% above the present 87,000 units each year if it were willing to increase the xed selling expenses by $130,000. What is the nancial advantage {disadva ntage} of investing an additional $130,000 in xed selling expenses? 1b. Would the additional investment bejustied? 2. Assume again that Andretti Company has sufcient capacity to produce 104,400 Daks each year. A customer in a foreign market wants to purchase 17,400 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $13,920 for permits and licenses. The only selling costs that would be associated with the order would be $2.80 per unit shipping cost. What is the breakeven price per unit on this order? 3. The company has 800 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 se ling 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 strike is expected to last for two months. Andretti Com oany has enough material on hand to operate at 25% of normal levels forthe 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 40% 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 Ancretti 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 financial advantage {disadvantage} of closing the plant for the twomonth period? d. Should Andretti close the plant for two men hs? 5. An outside manufacturer has offered to produce 87,000 Daks and ship them directly to Andretti's customers. lfAndretti Company accepts this offer, the facilities that it uses to p oduce 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