Problem 13.18 (Algo) Relevant Cost Analysis In a Varlety of Sltuations [LO13.2, LO13.3, LO13.4] Andrettl Company has a single product called a Dak. The company normally produces and sells 81,000 Daks each year at a selling price of $56 per unit. The company's unlt costs at this level of actlvity are given below: A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume that Andrettl Company has sufficlent capacity to produce 101,250 Daks each year without any Increase In fixed manufacturing overhead costs. The company could increase its unlt sales by 25% above the present 81,000 units each year If It were willing to Increase the fixed selling expenses by $120,000. What is the financlal advantage (disadvantage) of Investing an additional $120,000 in fixed selling expenses? 1-b. Would the additional Investment be Justified? 2. Assume again that Andrettl Company has sufficlent capacity to produce 101,250 Daks each year. A customer In a forelgn market wants to purchase 20,250 Daks. If Andrettl accepts this order It would have to pay Import dutles on the Daks of $3.70 per unit and an additional $16,200 for permits and licenses. The only selling costs that would be assoclated with the order would be $2.40 per unlt shipping cost. What is the break-even price per unit on this order? 3. The company has 900 Daks on hand that have some Irregularltles and are therefore considered to be "seconds." Due to the Irregularlties, It will be impossible to sell these units at the normal price through regular distributlon channels. What is the unit cost figure that is relevant for setting a minimum selling price? 4. Due to a strlke in its supplier's plant, Andretti Company is unable to purchase more materlal for the productlon of Daks. The strike is expected to last for two months. Andrettl Company has enough materlal on hand to operate at 25% of normal levels for the two-month perlod. As an alternatlve. Andrettl could close Its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 35% of thelr normal level during the two-month perlod and the fixed selling expenses would be reduced by 20% during the two-month perlod. a. How much total contributlon margin will Andrettl forgo if It closes the plant for two months? b. How much total fixed cost will the company avold If It closes the plant for two months? c. What is the financlal advantage (disadvantage) of closing the plant for the two-month perlod? d. Should Andrettl close the plant for two months? 5. An outside manufacturer has offered to produce 81,000 Daks and ship them directly to Andrettl's customers. If Andrettl Company accepts this offer, the facilitles 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 varlable selling expenses would be only two-thirds of their present amount. What is Andrettl's avoldable 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. Assume that Andretti Company has sufficient capacity to produce 101,250 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 81,000 units each year if it were willing to increase the fixed selling expenses by $120,000. What is the financial advantage (disadvantage) of investing an additional $120,000 in fixed selling expenses? Show less A