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Andretti Company has a single product called a Dak. The company normally produces and sells 85,000 Daks each year at a selling price of $46
Andretti Company has a single product called a Dak. The company normally produces and sells 85,000 Daks each year at a selling price of $46 per unit. The company's unit costs at this level of activity are given below: Direct materials 7.50 Direct labor 11.00 Variable manufacturing overhead 2.00 7.00 ($595,000 total) Fixed manufacturing overhead Variable selling expenses 2.70 Fixed selling expenses 5.50 ($467,500 total) Total cost per unit 35.70 A number of questions relating to the production and sale of Daks follow. Each question is independent Required: 1-a. Assume that Andretti Company has sufficient capacity to produce 106,250 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 25% above the present 85,000 units each year if it were willing to increase the fixed selling expenses by $110,000. Calculate the incremental net operating income. (Round all dollar amounts to 2 decimal places.) Increased sales in units Contribution margin per unit Incremental contribution margin Less added fixed selling expense Incremental net operating income 0.00
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