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 $62 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $0.50 8.00 3.00 ($240,000 total) 2.70 3.00 ($240,000 total) A number of questions relating to the production and sale of Daks follow. Each question is Independent. Required: 1-3. Assume 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 unit sales by 35% above the present 80,000 units each year if it increased fixed selling expenses by $120,000. What is the financial advantage (disadvantage) of Investing an additional $120,000 in fixed selling expenses 1-b. Would the additional Investment be justified? 2. Assume Andrett Company has sufficient capacity to produce 108.000 Daks each year. A customer in a foreign market wants to purchase 28,000 Daks. If Andrett accepts this order, it would pay import duties on the Daks of $1.70 per unit and an additional $22,400 for permits and licenses. The only selling costs associated with the order would be $1.40 per unit shipping cost. What is the break-even price per unit on this order 3. The company has 700 Daks on hand with some irregularities that make it impossible to sell them at the normal price through regular distribution channels. What unit cost figure is re evant for setting minimum selling price to liquidate these units!? 4. Due to a strike in its supplier's plant. Andrett 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 materia, on hand to operate at 2595 of normal levels for the two-month period. As an sternative, Andretti could close lip ont down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 30% of the norms, level during the two-month period and the fixed selling expenses would be reduced by 20% during the two-month period. a. How much tots contribution margin will Andret forgo if it closes the plant for two months? 5. How much total fixed cost withe company avoid if it closes the plant for two months? c. What is the financis, advantage (disadvantages of closing the plant for the two-month period? d. Should Andretti close the pant for two months 5. An outside manufacturer offered to produce 80.000 Daks and ship them directly to Andretti's customers. If Andrett Company accepts this offer, the facilitles that it uses to produce Daks would be lo es however, fixed manufactur reduced by 75% Because the outside manufacturer would bay for all shipping costs, the varias e selling excenses would be only two- ig overhead COSS WOUS DO thires of their present amount. What Is Andrett 's avoldos e cost per unit it should compare to the price quotes by the outs de manufacturer: