Andretti Company has a single product called a Dak The company normally produces and sells 111,000 Daks each year at a selling price of $81 per unit The companys unit costs at this level of activity follow Direct materials $ 25 00 Direct labour 19 50 Variable manufacturing overhead 17 30 Fixed manufacturing overhead 5 00 $555,000 total Variable selling expenses 6 30 Fixed selling expenses 3 50 $388,500 total Total cost per unit $ 76 60 Required 1 Assume that Andretti Company has sufficient capacity to produce 200,000 Daks every year without any increase in fixed manufacturing overhead costs The company currently produces and sells 111,000 units each year However, it plans to increase the fixed selling expenses by $35,625 in order to increase sales By how much should sales increase in order to justify the additional $35,625 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 ) 2 Assume again that Andretti Company has sufficient capacity to produce 200,000 Daks every year A customer in a foreign market wants to purchase 37,000 Daks Import duties on the Daks would be $5 10 per unit, and costs for permits and licences would be $16,650 The only selling costs that would be associated with the order would be $8 30 per unit shipping cost Compute the per unit break even price on this order (Do not round intermediate calculations Round your answer to 2 decimal places ) 3 The company has 2,700 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 unit cost figure is relevant for setting a minimum selling price (Round your answer to 2 decimal places ) 4 Due to a strike in its suppliers plant, Andretti Company is unable to purchase more materials for the production of Daks The strike is expected to last for two months Andretti Company has enough materials on hand to continue to operate at 30 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, all fixed costs would continue at 50 of their normal level during the two month period What would be the dollar advantage or disadvantage of closing the plant for the two month period (Do not round intermediate calculations ) 5 An outside manufacturer has offered to produce Daks for Andretti Company and to ship them directly to Andrettis customers If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle however, fixed overhead costs would be reduced by 75 of their present level Since the outside manufacturer would pay all the costs of shipping, the variable selling costs would be only two thirds of their present amount Compute the unit cost figure relevant for comparison to whatever quoted price is received from the outside manufacturer (Do not round intermediate calculations Round your answer to 2 decimal places )

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Andretti Company has a single product called a Dak. The company normally produces and sells 111,000 Daks each year at a selling price of $81

Andretti Company has a single product called a Dak. The company normally produces and sells 111,000 Daks each year at a selling price of $81 per unit. The companys unit costs at this level of activity follow:


Direct materials	$	25.00
Direct labour		19.50
Variable manufacturing overhead		17.30
Fixed manufacturing overhead		5.00	$555,000 total
Variable selling expenses		6.30
Fixed selling expenses		3.50	$388,500 total
Total cost per unit	$	76.60
Required: 1. Assume that Andretti Company has sufficient capacity to produce 200,000 Daks every year without any increase in fixed manufacturing overhead costs. The company currently produces and sells 111,000 units each year. However, it plans to increase the fixed selling expenses by $35,625 in order to increase sales. By how much should sales increase in order to justify the additional $35,625? 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.) 2. Assume again that Andretti Company has sufficient capacity to produce 200,000 Daks every year. A customer in a foreign market wants to purchase 37,000 Daks. Import duties on the Daks would be $5.10 per unit, and costs for permits and licences would be $16,650. The only selling costs that would be associated with the order would be $8.30 per unit shipping cost. Compute the per-unit break-even price on this order. (Do not round intermediate calculations. Round your answer to 2 decimal places.) 3. The company has 2,700 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 unit cost figure is relevant for setting a minimum selling price? (Round your answer to 2 decimal places.) 4. Due to a strike in its suppliers plant, Andretti Company is unable to purchase more materials for the production of Daks. The strike is expected to last for two months. Andretti Company has enough materials on hand to continue to operate at 30% 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, all fixed costs would continue at 50% of their normal level during the two-month period. What would be the dollar advantage or disadvantage of closing the plant for the two-month period? (Do not round intermediate calculations.) 5. An outside manufacturer has offered to produce Daks for Andretti Company and to ship them directly to Andrettis customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed overhead costs would be reduced by 75% of their present level. Since the outside manufacturer would pay all the costs of shipping, the variable selling costs would be only two-thirds of their present amount. Compute the unit cost figure relevant for comparison to whatever quoted price is received from the outside manufacturer. (Do not round intermediate calculations. Round your answer to 2 decimal places.)