Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Andretti Company has a single product called a Dak. The company normally produces and sells 83,000 Daks each year at a selling price of $S6

image text in transcribed
image text in transcribed
image text in transcribed
Andretti Company has a single product called a Dak. The company normally produces and sells 83,000 Daks each year at a selling price of $S6 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Pixed manufacturing overbead Variable selling expenses Pixed selling expenses Total cost per unit $ 7.50 11.00 2.00 7.00 (5581,000 total) 3.70 4.50 ($373,500 total) $35.70 A number of questions relating to the production and sale of Daks follow. Each question is independent. Complete this question by entering your answers in the tabs below. Reg 5 Reg 1A Reg 18 Reg 2 Reg 3 Reg 4 to 4C Reg 4D 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 selling price? (Round your answer to 2 decimal places.) Rolevant unit cost por unit Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 Reg 3 Req 4A to 40 Reg 4D Reg 5 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 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 two-month period and the fixed selling expenses would be reduced by 20% during the two-month period. (Round number of units produced to the nearest whole number. Round your intermediate calculations and final answers to 2 decimal places. Any losses/reductions should be indicated by a minus sign.) 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 perlod? Show less Forgone contribution margin Total avoidable fixed costs Financial advantage (disadvantage) $ $ 109,964.00 80.233.00

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray Garrison, Theresa Libby, Alan Webb

9th canadian edition

1259269477, 978-1259269479, 978-1259024900

Students also viewed these Accounting questions