Problem 11-18 Relevant Cost Analysis in a variety of Situations (L011-2, LO11-3, LO11-4) Andret Company has a single product called a Dak The company normally produces and sells 86,000 Daks each year at a selling price of $62 per unit. The company's unit costs at the level of activity are given below. $8.50 11.00 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fived selling expenses Total cost per unit 3.5e 9.00 (5774,000 total) 3.70 3.00 (5258,000 total) 3.70 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume that Andrett Company has sufficient capacity to produce 111,800 Doks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 86.000 units each year if it were willing to increase the fred selling expenses by $110,000. What is the financial advantage (disadvantages of Investing an additional $110,000 in fixed selling expenses? 1- Would the additional investment be justified? 2. Assume again that Anoretu Company has suficient capacity to produce 111,800 Daks each year A customer in a foreign marker wants to purchase 25,800 Daks 1 Andrett accepts this order it would have to pay import duties on the Daks of $470 per unit and on additional $20.640 for permits and licenses. The only seating costs that would be associated with the order would be $160 per un shipping cost. What is the break-even price per unit on this order? 3. The company has 800 Doks on hand that have some irregularities and are therefore considered to be 'seconds. Due to the Irregulares. Wibe imposs ble to sell these units of the normal price through regular atribution channels. What is the unit cost figure that is relevant for Setting a minimum setting price? 4 Due to a strike in its supotter's piant Andreu company is unable to purchase more material for the prouction of Daks. The strike> expected to lose for two months Andreu company has enough material on hand to operate : 25% of normal levels for the two-mont period. As an alternative. Andre could close its plant down entirely for the two months of the plant were closed, feed manufacturing (Prey 567 Next > search otce 76 figure that is relevant for setting a minimum selling price? 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 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 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 Andrett 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? 5. An outside manufacturer has offered to produce 86,000 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; however, fixed 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 two- thirds of their present amount What is Andrettil's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? Complete this question by entering your answers in the tabs below. Req IA Reg 18 Reg2 Reg 3 Reg 4A to 4C Reg 4D Reg 5 Assume that Andretti Company has sufficient capacity to produce 111,800 Datos each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 86,000 units each year if it were willing to increase the fixed telling expenses by $110,000. What is the financial advantage (disadvantage of investing an additional $110.000 in fixed selling expenses? Show less Reg 10 > Prey Next > 0 e to search o Bi VARS and Ship them directly to Andretu's customers. If Andretu C accepts this offer the facilities that it uses to produce Daks would be idle, however, fixed manufacturing overhead costs wou reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the ou manufacturer? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req2 Req 3 Reg 4A to 4C Req 4D Req 5 Assume that Andretti Company has sufficient capacity to produce 111,800 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 86,000 units each year if it were willing to increase the fixed selling expenses by $110,000. Would the additional investment be justified? Yes No 3 565, Volta seg expenses would be only two Ahirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? Complete this question by entering your answers in the tabs below. Reg 1A Reg 18 Req2 Reg 3 Req 4A to 40 Reg 40 Reqs Assume again that Andretti Company has sufficient capacity to produce 111,800 Daks each year. A customer in a foreign market wants to purchase 25,800 Daks. If Andretti accepts this order it would have to pay import duties on the Dal of 4.70 per unit and an additional $20,640 for permits and licenses. The only selling costs that would be associated with the order would be 51.60 per unit shipping cost. What is the break-even price per unit on this order? (Round your answers to 2 decimal Show less Break-even price per unit search O c Company web utat it uses to produce Daks would be idle; however, fixed 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 tv 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? Complete this question by entering your answers in the tabs below. Reg 1A Req 18 Reg 2 Req3 Reg 4A to 40 Req 4D Reg 5 The company has 800 Daks on hand that have some irregularities and are therefore considered to be seconds. Due to the irregularities, 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.) Rolevant unit cost per unit o search . Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 2 Reg 3 Reg 4A to 4C Req 4D Req5 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 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 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. (Round number of units produced to the nearest whole number. Round your intermediate calculations and final answers to 2 decimal places. 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 the plant for the two-month period? Show less Forgone contribution margin Totai avoidable fixed costs Financial advantage disadvantage Reg 3 Reg 4D> Complete this question by entering your answers in the tabs below. Reg LA Reg 1B Reg 2 Reg 3 Req 4A to 4C Reco Req5 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 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 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. Should Andretti close the plant for two months? Show less Yes No o Pie 3 to search Armuret company Opis uns onter, the facilities that it uses to produce Daks would be idle, however, fixed 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 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? Complete this question by entering your answers in the tabs below. Req 1A Req 18 Req 2 Req3 Req 4A to 4C Req 4D Req5 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 be 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. 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.) Show less Avoidable cost per unit o te here to search