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I just need help with the rest of this problem 3, 4, 5. 20.00 points Problem 10-18A Relevant Cost Analysis in a Variety of Situations
I just need help with the rest of this problem 3, 4, 5.
20.00 points Problem 10-18A Relevant Cost Analysis in a Variety of Situations LO10-2, LO10-3, LO10-4] Andretti Company has a single product called a Dak. The company normally produces and sells 78,000 each year at a selling price of $44 per unit. The company's unit costs at this level of activity are given below Direct materials 6.50 Direct labor 8.00 Variable manufacturing overhead 3.10 Fixed manufacturing overhead 3.00 ($234,000 total) Variable selling expenses 3.70 Fixed selling expenses 5.50 ($429,000 total) Total cost per unit 29.80 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 97,500 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 25% above the present 78,000 units each year if it were willing to increase the fixed selling expenses by $130,000. Calculate the incremental net operating income. (Round all dollar amounts to 2 decimal places.) Increased sales in units 19.500 Contribution margin per unit 22.70 442,650.00 Incremental contribution margin Less added fixed selling expense 130,000.00 312,650.00 incremental net operating income 1-b. Would the increased fixed selling expenses be justified? O No Yes
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