Question
Andretti Company has a single product called a Dak. The company normally produces and sells 88000 Daks each year at a selling price of 56
Andretti Company has a single product called a Dak. The company normally produces and sells 88000 Daks each year at a selling price of 56 per unit. The companys unit costs at this level of activity are given below: Direct materials 6.50 direct labor 9.00 variable manufacturing overhead 3.30 fixed manufacturing overhead. 4.00 ( 352000 total) variable selling expenses 2.70 fixed selling expenses 3.50 ( 308000 total) total cost per unit 29 $ A number of questions relating to the production and sale of Daks follow. How much total contribution margin will Andretti forgo if it closes the plant for two months? how much total fixed cost will the company avoid if it closes the plant for two months? what is the financial advantage, disadvantage of closing the plant for the two month period?
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