nework Check my work Andretti Company has a single product called a Dak. The compary normally produces and sells price of $46 per unit. The company's unit costs at this level of activity are given below Direct materials Direct labor Variable manufacturing overhead 3.88 Fixed manufacturing overhead 10.00 ($868,000 total) Variable selling expenses Fixed selling expenses Total cost per unit 6.50 11.00 1.70 6.50 ($559,000 total) 39.50 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 107.500 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 86,000 units willing to increase the fixed selling expenses by $10,000. What is the financial advantage (disadvantage) of investing an $110,000 1-b. Would the additional investment be justified? 2 Assume again that Andretti Company has sufficient capacity to produce 107,500 D wants to purchase 21,500 Daks. If Andretti accepts this order it would have to pay import duties on th additional $12.900 for permits and licenses. The only selling costs that would be associated with the order would shipping cost What is the break-even price per unit on this order? 3. The company has 700 Daks on hand that irreqularities, it will be impossible to sell these units at the normal price each year if it were in fixed selling expenses? aks each year. A customer in a foreign market customer in a foreign market e Daks of $1.70 per unit and an be $1.40 per unit have some irregularities and are therefore considered to be "seconds. Due to the through reaular distribution channels What is the unit cost Lesson 7 Homework X m | L https/ ow/connecthtml?returnurl:https%3A%21%2Fconnectnteducaton.corm%2Fpaamweb%2Findexh Help Save & Exit Submit mework Check my work Required: 1-a Assume that Andretti Company has sufficient capacity to produce 107.500 Daks each year without any increase in fixed manufacturing overhead costs he company could increase its unit sales by 25% above the present 86 000 units each year if t were willing to increase the fixed selling expenses by $110,000. What is the financial advantage (disadvantage) of investing an additional $110,000 in fixed selling expenses? 1-b. Would the addtional investment be justified? 2 Assume again that Andretti Company has sufficient capacity to produce 107,500 Daks each year. A customer in a foreign market wants to purchase 21,500 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $1.70 per unit and an additional $12,900 for permits and licenses. The only selling costs that would be 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 that have some irreg rregularities, it figure that is relevant for setting a minimum selling prike? ularities and are therefore considered to be "seconds."Due to the will be impossible to sell these units at the normal price through regular distribution channels. What is the unit cost 4 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 25% of normal levels for the 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 30% of their normal level during the two-month period and the fixed selling expenses would be 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? two-month 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? 5. An outside manufacturer has offered to produce 86,000 Daks and ship them directly to Andretti's customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would reduced by 30% Because the outside manufacturer would pay for all shipping costs the variable selling expenses would be only two thirds of their present amount manufacturer? K Prev 4 of 7 Next