Andretti Company has a single product called a Dak. The compamy normally produces and selis 86.000 Daks each year at a celing price of $56 per unit. The company's unit costs at this level of activity are given belows A number of questions relating to the production and sale of Daks follow. Each question is independent. Reculred: 1. Asstme that Andretti Company has sufticient capacity ro produce 116100 Daks each year without any increase in fred manufacturing overhead costs. The company could increase its unit sales by 35% above the present 86,000 units each y ear if it were Whing to increase the fixed seiling expenses by $130.000. What is the financialadvantage (disadvantagej of investing an additiona! $130.000 in fixed selling expenses? 7-b. Woud the edditional invegtment be justified? 2. Assume again that Andretti Compamy hss sufficient capacity to produce 116.100 Daks each year. A.customer in a fore.gn market wants 10 purchase 30,100 Daks. If Andrettl accepts this order it would have 10 pay import duties onthe D.sks of S170 per unit and an bdditiond: S21.070 for petmits and licenses. The only seling costs that would be associated with the order would be St40 per unit shipping sost What is the breakeven price per unit on this order? 3. The company has 600 Daks on hand that have some irreguiarities and are therefore considered to be "seconds * Due to the Iregularites, it will be impossible to selithese units at the normal price through regalar distribution channels. What is the unit cort figure that is relevant for setting aminimum selling price? 4. Due to a strike in its suppliep's piant, Andrett Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretw Company has enough material on nand to operate at 25% of normal levels for the two-month period. As an alternative. Andretti could close its plent down entirely tor the two months. If the plant were closed. fixed insnufacturing overhead costs would continue at 30% of their normal level durling the two-month period and the fixed seling expenses would be reduced by 20% during the two-month petiod. 5. An outgide manufacturer has offered to produce 86.000 Deks and ship them directly to Andiettils customers. If Andiemi Company accepts this offer, the facilities thot it uses to produce Daks would be idie; however, fxed 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 twrothirds of their present amount. What is Andreti's ovoidable cost per unit that it should compare to the price quoted by the outside manufacturer? a. How much total contribution margin will Andrett forgo if it closes the piant for two months? b. How much total fixed cost will the company avoid if it closes the plent for two months? ci. What is the financial advantoge (disadvantagel of closing the plant for the two-month period? d. Should Andretri close the plant for two months? Complete this question by entering your answers in the tabs below. Assume that Andrett Company has sufficient capacity to produce 116,100 Daks each year without any increase in fored manufacturing overhead costs. The company could increase its unit sales by 3595 above the present 86 , 000 vnits each year if t were willing to increase the ficed selling expenses by $130,000. What is the financial advantage (diadvantage) of investing an additionel $130,000 in fixed selling expenses