Problem 6-18 (Algo) Relevant Cost Analysis in a Variety of Situations [LOG-2, LOG-3, LOG-4] Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $62 per unit. The company's unit costs at this level of activity are given below: Direct materials 35 6.56 Direct labor 9.66 Variable manufacturing overhead 2.66 Fixed manufacturing overhead 9.66 ($783,666 total) Variable selling expenses 4.76 Fixed selling expenses 3.66 ($261,666 total) Total cost per unit $ 34.86 ' A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1a. Assume that Andretti Company has sufficient capacity to produce 113,100 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 87,000 units each year if it were willing to increase the xed selling expenses by $130,000. What is the financial advantage (disadvantage) of investing an additional $130,000 in fixed selling expenses? 1b. Would the additional investment bejustified? 2. Assume again that Andretti Company has sufficient capacity to produce 113,100 Daks each year. A customer in a foreign market wants to purchase 26,100 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $13,050 for permits and licenses. The only selling costs that would be associated with the order would be $2.20 per unit shipping cost. What is the breakeven price per unit on this order? 3. The company has 600 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? 4. Due to a strike in its suppliers 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 twomonth 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 35% of their normal level during the twomonth period and the fixed selling expenses would be reduced by 20% during the twomonth 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 twomonth period? d. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 87,000 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 twothirds 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 1B Req 2 Req 3 Assume that Andretti Company has sufcient capacity to produce 113,100 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 87,000 units each year if it were willing to increase the fixed selling expenses by $130,000. What is the financial advantage (disadvantage) of investing an additional $130,000 in fixed selling expenses? :ZI Req 4A to 4C Req 4D Req 5 Show IessA Req 1B ) Problem 6-18 (Algo) Relevant Cost Analysis in a Variety of Situations [LOG-2, LOG-3, L06-4] Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $62 per unit. The company's unit costs at this level of activity are given below: Direct materials 15 6.56 Direct labor 9.60 Variable manufacturing overhead 2.66 Fixed manufacturing overhead 9.66 ($783,666 total) Variable selling expenses 4.76 Fixed selling expenses 3.66 ($261,666 total) Total cost per unit $ 34.86 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1a. Assume that Andretti Company has sufficient capacity to produce 113,100 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 87,000 units each year if it were willing to increase the xed selling expenses by $130,000. What is the financial advantage (disadvantage) of investing an additional $130,000 in fixed selling expenses? 1b. Would the additional investment bejustified? 2. Assume again that Andretti Company has sufficient capacity to produce 113,100 Daks each year. A customer in a foreign market wants to purchase 26,100 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $13,050 for permits and licenses. The only selling costs that would be associated with the order would be $2.20 per unit shipping cost. What is the breakeven price per unit on this order? 3. The company has 600 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? 4. Due to a strike in its suppliers 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 twomonth 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 35% of their normal level during the twomonth period and the xed selling expenses would be reduced by 20% during the twomonth period. a. How much total contribution margin will Andretti forgo if it closes the plant fortwo 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 twomonth period? d. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 87,000 Daks and ship them directly to Andretti's customers. IfAndretti 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 twothirds 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 4A to 4C l Req 1A ' Req IE I Req 2 ' Req 3 Req 4D ' Req 5 l Assume that Andretti Company has sufficient capacity to produce 113,100 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 87,000 units each year if it were willing to increase the fixed selling expenses by $130,000. Would the additional investment be justified? OYes ONO Problem 6-18 (Algo) Relevant Cost Analysis in a Variety of Situations [LOG-2, L06-3, L06-4] Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $62 per unit. The company's unit costs at this level of activity are given below: Direct materials 15 6.58 Direct labor 9.88 Variable manufacturing overhead 2.68 Fixed manufacturing overhead 9.88 ($783,888 total) Variable selling expenses 4.78 L Fixed selling expenses .88 ($261,888 total) Total cost per unit $34.88 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1a. Assume that Andretti Company has sufficient capacity to produce 113,100 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 87,000 units each year if it were willing to increase the fixed selling expenses by $130,000. What is the financial advantage (disadvantage) of investing an additional $130,000 in fixed selling expenses? 1b. Would the additional investment bejustified? 2. Assume again that Andretti Company has sufficient capacity to produce 113,100 Daks each year. A customer in a foreign market wants to purchase 26,100 Daks. If Andretti accepts this order it would have to pay import duties on the Da ks of $4.70 per unit and an additional $13,050 for permits and licenses. The only selling costs that would be associated with the order would be $2.20 per unit shipping cost. What is the breakeven price per unit on this order? 3. The company has 600 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? 4. Due to a strike in its suppliers 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 twomonth 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 35% oftheir normal level during the twomonth period and the fixed selling expenses would be reduced by 20% during the twomonth 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 twomonth period? d. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 87,000 Daks and ship them directly to And retti'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 twothirds 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 1B Req 2 ' Req 3 Assume again that Andretti Company has sufficient capacity to produce 113,100 Daks each year. A customer in a foreign market wants to purchase 26,100 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $13,050 for permits and licenses. The only selling costs that would be associated with the order would be $2.20 per unit shipping cost. What is the breakeven price per unit on this order? (Round your answers to 2 decimal places.) Req 4A to 4C Req 4D H Req 5 I Show IessA Problem 6-18 (Algo) Relevant Cost Analysis in a Variety of Situations [LOG-2, LOG-3, LOG-4] Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $62 per unit. The company's unit costs at this level of activity are given below: Direct materials $ 6.50 Direct labor 9.00 Variable manufacturing overhead 2.60 Fixed manufacturing overhead 9.00 ($783,000 total) Variable selling expenses 4.70 Fixed selling expenses 3.00 ($261,000 total) Total cost per unit $ 34.80 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 113,100 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 87,000 units each year if it were willing to increase the xed selling expenses by $130,000. What is the financial advantage (disadvantage) of investing an additional $130,000 in fixed selling expenses? 1b. Would the additional investment bejustified? 2. Assume again that Andretti Company has sufficient capacity to produce 113,100 Daks each year. A customer in a foreign market wants to purchase 26,100 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $13,050 for permits and licenses. The only selling costs that would be associated with the order would be $2.20 per unit shipping cost. What is the breakeven price per unit on this order? 3. The company has 600 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? 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 twomonth 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 35% of their normal level during the twomonth period and the fixed selling expenses would be reduced by 20% during the twomonth 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 twomonth period? d. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 87,000 Daks and ship them directly to Andretti's customers. lfAndretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, xed 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 twothirds 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 4A to 4C Req 4D I ' Req 1A H Req 13 H Req 2 ' Req 3 Req 5 ' The company has 600 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 gure that is relevant for setting a minimum selling price? (Round your answer to 2 decimal places.) Problem 6-18 (Algo) Relevant Cost Analysis in a Variety of Situations [LOG-2, L06-3, LOG-4] Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $62 per unit. The company's unit costs at this level of activity are given below: Direct materials :5 6.56 Direct labor 9.66 Variable manufacturing overhead 2.66 Fixed manufacturing overhead 9.66 ($783,666 total) Variable selling expenses 4.76 Fixed selling expenses 3.66 ($261,666 total) Total cost per unit $34.86 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1a. Assume that Andretti Company has sufficient capacity to produce 113,100 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 87,000 units each year if it were willing to increase the fixed selling expenses by $130,000. What is the financial advantage (disadvantage) of investing an additional $130,000 in fixed selling expenses? 1b. Would the additional investment bejustified? 2. Assume again that Andretti Company has sufficient capacity to produce 113,100 Daks each year. A customer in a foreign market wants to purchase 26,100 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $13,050 for permits and licenses. The only selling costs that would be associated with the order would be $2.20 per unit shipping cost. What is the breakeven price per unit on this order? 3. The company has 600 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? 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 twomonth 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 35% of their normal level during the twomonth period and the fixed selling expenses would be reduced by 20% during the twomonth 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 twomonth period? (:1. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 87,000 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 twothirds 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 IE I Req 2 II Req 3 I Req 4A to 4C I Req 4D I Req 5 I 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, xed manufacturing overhead costs would continue at 35% of their normal level during the twomonth period and the fixed selling expenses would be reduced by 20% during the twomonth period. (Round number of units produced to the nearest whole number. Round your intermediate calculations and nal 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 xed cost will the company avoid if it closes the plant for two months? c. What is the nancial advantage (disadvantage) of closing the plant for the twomonth period? Show IessA Forgone contribution margin Total avoidable xed costs Financial advantage (disadvantage) Problem 6-18 (Algo) Relevant Cost Analysis in a Variety of Situations [LOG-2, LOG-3, LOG-4] Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $62 per unit. The company's unit costs at this level of activity are given below: Direct materials $ 6.50 Direct labor 9.00 Variable manufacturing overhead 2.60 Fixed manufacturing overhead 9.00 ($783,000 total) Variable selling expenses 4.70 w Fixed selling expenses .00 ($261,000 total) Total cost per unit $34.80 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1a. Assume that Andretti Company has sufficient capacity to produce 113,100 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 87,000 units each year if it were willing to increase the fixed selling expenses by $130,000. What is the financial advantage (disadvantage) of investing an additional $130,000 in fixed selling expenses? 1b. Would the additional investment bejustified? 2. Assume again that Andretti Company has sufficient capacity to produce 113,100 Daks each year. A customer in a foreign market wants to purchase 26,100 Daks. lfAndretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $13,050 for permits and licenses. The only selling costs that would be associated with the order would be $2.20 per unit shipping cost. What is the break-even price per unit on this order? 3. The company has 600 Da ks 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? 4. Due to a strike in its suppliers 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 twomonth 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 35% of their normal level during the twomonth period and the fixed selling expenses would be reduced by 20% during the twomonth 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 87,000 Daks and ship them directly to Andretti's customers. If And retti 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 twothirds 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 H Req 1B Req 2 H 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 is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the twomonth period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, xed manufacturing overhead costs would continue at 35% of their normal level during the twomonth period and the fixed selling expenses would be reduced by 20% during the twomonth period. Should Andretti close the plant for two months? Show lessA OYes ONo Problem 6-18 (Algo) Relevant Cost Analysis in a Variety of Situations [L06-2, LOG-3, LOG-4] Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $62 per unit. The company's unit costs at this level of activity are given below: Direct materials $ 6.50 Direct labor 9.00 Variable manufacturing overhead 2.60 Fixed manufacturing overhead 9.00 ($783,000 total) Variable selling expenses 4.70 Fixed selling expenses 3.00 ($261,000 total) Total cost per unit $ 34.80 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1a. Assume that Andretti Company has sufficient capacity to produce 113,100 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 87,000 units each year if it were willing to increase the fixed selling expenses by $130,000. What is the financial advantage (disadvantage) of investing an additional $130,000 in fixed selling expenses? 1b. Would the additional investment bejustified? 2. Assume again that Andretti Company has sufficient capacity to produce 113,100 Daks each year. A customer in a foreign market wants to purchase 26,100 Daks. If Andretti accepts this order it would have to pay import duties on the Da ks of $4.70 per unit and an additional $13,050 for permits and licenses. The only selling costs that would be associated with the order would be $2.20 per unit shipping cost. What is the break-even price per unit on this order? 3. The company has 600 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? 4. Due to a strike in its suppliers 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 twomonth 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 35% of their normal level during the twomonth period and the fixed selling expenses would be reduced by 20% during the twomonth period. a. How much total contribution margin will Andretti forgo if it closes the plant fortwo 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 twomonth period? cl. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 87,000 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 twothirds 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 4A to 4C ' Req 1A H Req 15 H Req 2 H Req 3 Req 4D ' Req 5 An outside manufacturer has offered to produce 87,000 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.)