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Andretti Company has a single product called a Dak. The company normally produces and sells 80,000 Daks each year at a selling price of $42
Andretti Company has a single product called a Dak. The company normally produces and sells 80,000 Daks each year at a selling price of $42 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing Variable selling expenses Fixed selling expenses $ 9.50 9.00 3.70 7.00 ($560,000 total) 4.70 5.50 ($440,000 total) overhead Total cost per unit $ 39.40 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 108,000 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 35% above the present 80,000 units each year if it were willing to increase the fixed selling expenses by $120,000. Calculate the incremental net operating income. (Round all dollar amounts to 2 decimal laces.) 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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