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Need help solving 2, 3, 4, 5. Thanks Andretti Company has a single product called a Dak. The company normally produces and sells 86,000 Daks
Need help solving 2, 3, 4, 5. Thanks
Andretti Company has a single product called a Dak. The company normally produces and sells 86,000 Daks each year at a selling price of $46 per unit. The company's unit costs at this level of activity are given below: $ 7.50 10.00 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses 2.90 8.00 (S688,000 total) 4.70 4.50 (S387,000 total) Total cost per unit S 37.60 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 116,100 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 35% above the present 86,000 units each year if it were willing to increase the fixed selling expenses by $140,000. Calculate the incremental net operating income. (Round all dollar amounts to 2 decimal places Answer is complete and correct Increased sales in units Contribution margin per unit Incremental contribution margin Less added fixed selling expense Incremental net operating income 30,100 20.90 $ 629,090.00 140,000.00 $ 489,090.00 1-b. Would the increased fixed selling expenses be justified? YesStep by Step Solution
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