Problem 12-18 Relevant Cost Analysis in a Variety of Situations LO12-2, LO12-3, LO12-4) Andretti Company has a single product called a Dak. The company normally produces and sells 81,000 Daks each year at a selling price of $62 per unit. The company's unit costs at this level of activity are given below: 9.50 10.00 3.40 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Pixed selling expenses Total cost per unit 8.00 ($648,000 total) 2.70 3.00 (243,000 total) 36.60 A number of questions relating to the production and sale of Daks follow. Each question is independent. LIDIOU MIUl Uhe oraer would be $2.30 per unt naLTS Une break-even price per unit on this order? 3. The company has 800 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 reguiar distribution channels. What is the unit cost 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 iod. 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 35% 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? 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 81,000 Daks and ship them directly to Andrett's accepts this offer, the facilities that it uses to produce reduced by 30%. Because manufacturer woul thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price manufacturer? ny Daks would be idle; however, fixed manufacturing overhead costs would be the outside manufacturer would pay for all shipping costs, the variable sel & Answer is not complete Complete this question by entering your answers in the tabs below. Req 3 Req 4A to 4C Req 4D Req 2 Req 5 Req 1A Req 18 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 anwer to 2 decimal places.) 0.00per unit Relevant unit cost Req 4A to 4C > Req 2 Complete this question by entering your answers in the tabs below. Req 1AReq 18 Req 2 Req 3 Req 4A to 4C Req 4D 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, i 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 dosed, fixed manufacturing overhead costs would continue at 3S% f 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 p nearest whole number. Round your should be indicated by a minus sign.) d to the intermediate calculations and final answers to 2 decimal places. Any losses/reductions a. How much total contribution margin will Andretti forgo if it closes the plant for two months? b. How much total c. fixed cost will the company avoid if it closes the plant for two months? What is the financial advantage (disadvantage) of closing the blant for the two-month period? Show less A n margin co Total avoidable fixed costs Req 4D > Complete this question by entering your answers in the tabs below. Req 3 Req 4 to 4CReq 4D R@s Req 1A Req 1B Req 2 rer has offered to produce 81,000 Daks and ship them directly to Andretti's customers. If Andretti overhead Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing r would pay for all shipping costs, the variable selling compare costs would be reduced by 30%. Because the outside manufacture expenses would be onl two-thirds of their present amount. What is Andretti's avoidable cost per unit that it should und intermediate calculations. Round your answers to 2 decimal places.) show less cost per unit Req 4D
