Ch Andretti Company has a single product called a Dak. The company normally produces and sells 60,000 Daks each year at a selling price of $32 per unit. The company's unit costs at this level of activity are glven below: $10.00 labor 2.30 5.00 ($300,000 total) 1.20 3.50 ($210,000 total) Fixed manufacturing overhead Total cost per unit $26.50 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 90,000 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 60,000 units each year if it were willing to increase the fixed selling expenses by $80,000. What is the financial advantage (disadvantage) of Investing an additional $80,000 in fixed selling expenses? -b. Would the additional investment be justified? 2. Assume agein that Andretti Company has sufficient capacity to produce 90,000 Daks each year. A customer in a foreign market wants to purchase 20,000 Daks. If Andretti accepts this order it would have to pay im additional $9,000 for permits and licenses. The only selling costs that would be associated with shipping cost. What is the break-even price per unit on this order? 3. The company has 1,000 Daks on hand irregularities and port duties on the Daks of $1.70 per unit and an the order would be $3.20 per unit d that have some irregularities and are therefore considered to be seconds."Due to the be impossible to sell these units at the normal price through regular distribution channels. What is the unit cost figure that is relevant for setting a minimum selling price? upplier's plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is pany has enough material on hand to operate at 30% of normal levels for the two-month expected to last for two months. Andretti Com period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhea reduced by 20% during the two-month period. a. How much total contribution margin will Andretti forgo if it closes the plant for two months? b. How much total fixed cost will the company avoid if it closes the plant for two months? c. What is the financial advantage (disadvantage) of closing the plant for the two-month period? d. Should Andretti close the plant for two months? d costs would continue at 60% of their normal level during the two-month period and the fixed selling expenses would be prey ,1 of 5 Next >. d. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 60,000 Daks and ship them directly to Andrett's customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; howeve reduced by 75%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two- thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? r, fixed manufacturing overhead costs would be Complete this question by entering your answers in the tabs below. Req 5 Req 2 Req 4D Req 1A Req 3 Req 4A to 4C Req 1B Assume that Andretti Company has sufficient capacity to produce 90,000 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% a bove the present 60,000 units each year if the fixed selling expenses by $80,000. What is the financial advantage (disadvantage) of investing an additional $80,000 in fixed selling expenses? Req 18 Next > 10, 5EE be ldle , flxed manufacturing overhead costs w euuted By /5%. Because the outside manufacturer would pay for all shipping costs, the varlable selling expenses would b thirds of their present amount. What Is Andretti's avoidable cost per unit that it should compare to the price quoted by the manufacturer? Complete this question by entering your answers in the tabs below. Req 3 Req 4A to 4C Req 4D Req 1A Req 1B Req 2 Req s Assume again that Andretti Company has sufficient capacity to produce 90,000 Daks each year. A customer in a market wants to purchase 20,000 Daks. If Andretti accepts foreign this order it would have to pay import duties on the Daks of $1.70 r unit and an additional $9,000 for permits would be $3.20 per unit shipping cost. What is the break-even price per places.) and licenses. The only selling costs that would be associated with the order unit on this order? (Round your answers to 2 decimal Show less unit Req 3> K Req 18 Prey1 of 5lNext > CUSY ule pIahe tor the two-month period? d. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 60,000 Daks and ship them directly to Andrettl's customers. If Andretti accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs wor reduced by 75%. Because the outside manufacturer thirds of their present amount. What is Andretti's avoidable cost per u manufacturer? would pay for all shipping costs, the variable selling expenses would b nit that it should compare tothe price quoted by the Complete this question by entering your answers in the tabs below. Req 4D Req 5 Req 2 Req 3 Req 4A to 4C Req 1A Req 18 The company has 1,000 Daks on hand that have some irregularities and are therefore considered to be "seconds." Due to the rregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What is the unit cost figure that is relevant for setting a minimum selling price? (Round your answer to 2 decimal places.) per unit cost Req 4A to 4C > Req 2 Next> 10, 5ll Prey SlD 0IeMl Birectly to Andretti's customers. If Andretti Cor r, fixed manufacturing overhead costs woulc decepts this offer, the facilities that it uses to produce Daks would be idle reduced by 75% Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be thirds of thelr present amount. What is Andrettl's avoldable cost per unit that it should compare to the price quoted by the out manufacturer? Complete this question by entering your answers in the tabs below. Req 4D Req 3 Req 4A to 4C Req 1A Req 18 Req 2 Req 5 Due to a strike in its supplier's plant, Andretti 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 material on hand to operate at 30% of normal levels for the two-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 60% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two-month period. (Any losses/reductions should be indicated by a minus sign.) a. How much total contribution margin will Andretti forgo if it closes the plant for two months? b. How much total fixed cost will the company avoid if it closes the plant for two months? c What is the financial advantage (disadvantage) of closing ther plant for the two-month period? Show less A Req 4D K Req 3 Frey, .. 10f 5 :: Next> d mahuracturer has offered to produce 60,000 Daks and shlp them directly to Andrettl's customers. If Andretti Comp accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would b reduced by 75% Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be onl thirds of their present amount. What is Andrettl's avoidable cost per unit that it should compare to the price quoted by the outsio manufacturer? Complete this question by entering your answers in the tabs below Req 2 Req 18 Req 5 Req 1A Req 3 Req 4A to 4C Req 4D An outside manufacturer has offered to produce 60,000 Daks and ship them directly to Andretti's customers. If Andrett Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, Tixed manufacturing overhead costs would be reduced by 75%. B expenses would be only two-thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? (Do not round intermediate calculations. Round your answers to 2 decimal places.) ecause the outside manufacturer would pay for all shipping costs, the varlable selling Show less& Req 4D 10, 5ll Next > Prey