Required:

$1-$a$.$ Assume that Andrettl Company has sufficient capacity to produce $102,000$ Daks each year without any increase in

fixed manufacturing overhead costs. The company could Increase its unit sales by $20\%$ above the present $85,000$ units

each year If it were willing to increase the fixed selling expenses by $$130,000.$ What is the financial advantage

$($dlsadvantage$)$ of Investing an addilional $$130,000$ in fixed selling expenses?

$1-$b$.$ Would the additional Investment be justified?

Assume agaln that Andretti Company has sufficlent capacity to produce $102,000$ Daks each year. A customer in a

foreIgn market wants to purchase $17,000$ Daks. If Andrettl accepts this order It would have to pay import dutles on the

Daks of $$4\mathrm{.}70$ per unit and an additional $$13,600$ for permits and licenses. The only selling costs that would be assoclated

with the order would be $$2\mathrm{.}10$ per unit shipping cost. What is the break$-$even price per unit on this order?

The company has $900$ Daks on hand that have some irregularitles and are therefore considered to be "seconds." Due

to the Irregularitles, 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?

Due to a strike in its suppller's plant, Andretti Company is unable to purchase more material for the production of Daks.

The strike is expected to last for two months. Andrettl Company has enough material on hand to operate at $25\%$ of

normal levels for the two$-$month perlod. As an alternative, 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 contribution 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 financial advantage $($disadvantage$)$ of closing the plant for the two$-$month perlod?

d$.$ Should Andrettl close the plant for two months?

An outside manufacturer has offered to produce $85,000$ Daks and ship them directly to Andrettl's customers. If

Andrettl Company accepts this offer, the facilltles 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 thelr present amount. What is Andrettl's avoidable cost

per unit that it should compare to the price quoted by the outside manufacturer?

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

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 $35\%$ of their normal level during the two$-$month period and the

fixed selling expenses would be reduced by $20\%$ during the two$-$month period. $($Round number of units produced to the

nearest whole number. Round your intermediate calculations and final answers to $2$ decimal places. Any losses or 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?