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Problem 7-18 Relevant Cost Analysis in a Variety of Situations [LO 7-2, LO 7-3, LO 7-4] Andretti Company has a single product called a Dak.
Problem 7-18 Relevant Cost Analysis in a Variety of Situations [LO 7-2, LO 7-3, LO 7-4] Andretti Company has a single product called a Dak. The company normally produces and sells 83,000 Daks each year at a selling price of $44 per unit. The company's unit costs at this level of activity are given below. Direct materials $ 8.50 Direct labor 9.00 Variable manufacturing overhead 2.60 Fixed manufacturing overhead 8.00 ($664,000 total) Variable selling expenses 2.70 Fixed selling expenses 4.50 ($373,500 total) Total cost per unit $ 35.30 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 103,750 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its sales
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