Andretti Company has a single product called a Dak. The company normally produces and sells 89,000 Daks each year at a selling price of $56 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labor Variable nanufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $ 8.50 9.00 2.10 8.00 ($712,000 total) 3.70 3.50 (5311,500 total) $34.80 ce A number of questions relating to the production and sale of Daks follow. Each question is independent Required: 1-a. Assume that Andrett Company has sufficient capacity to produce 120.150 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit soles by 35% above the present 89.000 units each year it were Willing to Increase the fixed selling expenses by $110.000. What is the financial advantage (disadvantage) or investing an additional $110,000 in fixed selling expenses? 16. Would the additional Investment be justified? 2. Assume again that Andrett Company has sufficient capacity to produce 120,150 Daks each year. A customer in a foreign market wants to purchase 31150 Daks. Il Andretti accepts this order it would have to pay import duties on the Daks of $2.70 per unit and on adonal $18.690 for permits and licenses. The only selling costs that would be associated with the order would be $260 per unit shipping cost. What is the break even price per unit on this order? 3. The company has 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 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 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 Required: 1-a. Assume that Andretti Company has sufficient capacity to produce 120,150 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 35% above the present 89.000 units each year if it were willing to increase the fixed selling expenses by $110.000. What is the financial advantage (disadvantage) of investing an additional $110,000 in fixed selling expenses? 16. Would the additional investment be justified? 2. Assume again that Andretti Company has sufficient capacity to produce 120,150 Daks each year. A customer in a foreign market wants to purchase 31150 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $2.70 per unit and an additional $18,690 for permits and licenses. The only selling costs that would be associated with the order would be $2.60 per unit shipping cost. What is the break even price per unit on this order? 3. The company has 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 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 two month period and the fixed selling expenses would be teduced by 20% during the two-month period 2. How much total contribution marginwilt 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? d. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 89,000 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? accepts this offer, the facilities that it uses to produce Daks would be idle, however, fixed manufacturing overhead costs w reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the manufacturer? Complete this question by entering your answers in the tabs below. Req1A Reg 18 Reg 2 Reg 3 Reg 4A to 40 Req 4D Reg 5 Assume that Andretti Company has sufficient capacity to produce 120,150 Daks each year without any Increase in fixed manufacturing overhead costs. The company could increase its unit sales by 35% above the present 89,000 units each year if it were willing to increase the fixed selling expenses by $110,000. What is the financial advantage (disadvantage) of investing an additional $110,000 in fixed selling expenses? Show less RO 1A Reg 1B > d. Should Andretti close the plant for two months 5. An outside manufacturer has offered to produce 89,000 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. Reg 1A Reg 13 Req2 Reg 3 Reg 4 to 4C Reg 40 Reg 5 Assume that Andretti Company has sufficient capacity to produce 120,150 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 35% above the present 89,000 units each year it were willing to increase the fixed selling exponses by $110,000. Would the additional investment be justified? Yes OND 5. An outside manufacturer has offered to produce 89,000 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 IA Reg 13 Reg 2 Req3 Req 4 to 40 Reg 4D Reqs Assume again that Andretti Company has sufficient capacity to produce 120,150 Daks each year. A customer in a foreion market wants to purchase 31,150 Daks. If Andretti accepts this order it would have to pay Import duties on the Daks of $2.70 per unit and an additional $18,690 for permits and licenses. The only selling costs that would be associated with the order would be $2.60 per unit shipping cost. What is the break-even price per unit on this order? (Round your answers to ecimal places) Show less Broakovon price per un 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 89,000 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. Reg 1A Reg 16 Reg 2 Reg Reg 4 to 40 Reg 40 Reg 5 The company has 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 is the unit cost figure that is relevant for setting a minimum selling price? (Round your answer to 2 decimal places) Relevant cost per unit C Reg 2 Req 4A to 4C > 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. Reg 1A Reg 1B Reg 2 Reg 3 Reg 4 to 4C 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, lixed manufacturing overhead costs would continue at 30% of their normal level during the two month period and the ficed 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? s. What is the financial advantage (disadvantage) of closing the plant for the two-month period? Show less Forgone contribution margin Tot voidable foxed costs Financial advantage (disadvantage) 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. Reg 1A Reg 13 Reg 2 Req3 Reg 4 to 4C Req 4D Regs nt 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. Andrett 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 of the plant were closed, fixed manufacturing overhead costs would continue at 30% of their normal level during the two month period and the Tixed selling expenses would be reduced by 20% during the two month period. Should Andretti close the plant for two months Show less Yes NO PEOX 1 of 1 1. Next > 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. BOOK Req1A Req 18 Reg 2 Req3 Req 4 to 4C Reg 40 Reqs Print Ferences An outside manufacturer has offered to produce 89,000 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? (Do not round Intermediate calculations. Round your answers to 2 decimal places) Show less Avedibile costant