Answered step by step
Verified Expert Solution
Question
1 Approved Answer
URGENT! IF EACH ANSWER IS CORRECT, I WILL LEAVE AN UPVOTE Andretti Company has a single product called a Dak. The company normoly produces and
URGENT! IF EACH ANSWER IS CORRECT, I WILL LEAVE AN UPVOTE
Andretti Company has a single product called a Dak. The company normoly produces and seils 82,000 Daks each year at a selling price of 556 pet unit. The company's unit costs at this level of activity are olven below: A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume Andretti Company has sufficient capacity to produce t10,700 Daks each year without any increase in foxed manufacturing overipeod costs. The company could increase its unit sales by 35% above the present 82,000 units each year if it increased foxed seling expenses by $110.000. What is the financial advantage (disadvantage) of investing an additional $110,000 in fixed selling expenses? 1-b. Would the additional investment be justifled? 2. Assume Andretti Company has sufficlent capacity to produce 110,700 Daks each yeat. A customer in a foreign market wants to purchase 28700 Daks. If Andretti accepts this order, it would pay import duties on the Daks of $2.70 per unit and an additional $14.350 for permits and licenses. The only selling costs assoclated with the order would be $270 per unit shipping cost. What is the break-even price per unit on this order? 3. The company has 500 Daks on hand with some irregularities that make it impossible to sell them at the normat price through regular distribution channels. What unit cost figure is relevant for setting a minimum selling price to liquidate these units? 4. Due to a strike in its stupplier's plant, Andrett Company is unable to purchase moce 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 fwo-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fuced manufacturing overhead costs would continue at 35% of their normal level during the two-month period and the flxed selling expenses would be reduced by 20% during the two-month period. a. How much total contribution margin will Andretti forgo if if closes the plant for two months? b. How much totai fixed cost will the company avoid if it closes the plant for two months? c. What is the financial advantoge (disadvantage) of closing the piant for the two-month period? d. Should Andretti close the plant for two months? 4. Die to a strike in its supplers plont, Andretti Company is unable to purchose more material for the production of Daks, The strike is expected to iast for two months Andrets Company has enough materlal on hand to opereto at 25% of normal levels for the two-month period. As an aiternative, Andrem couid close its plant down entirely for the two months. If the plant were closed, fued mainflacturing overnead costs would continue at 35% of their normal a. How much total contribution margin will Andretti forgo if it closes the plant for two months? b. How moch total foced cost will the campany avold if if closes the plant for two months? c. Whot is the financiat advantage (disadvantage) of closing the plant for the two-month period? d. Should Andreti close the plant for two inonthe? 5. An outside manufacturer offered to produce B2,000 Daks and ship them directly to Andrettis customers. if Andretu Company accepts this offer, the facinties that if uses to produce Doks would be idie, however, fixed manufacturing overhead costs would be reduced by 75 s. Because the outside manufacturer would pay for all shipping costs, the voriable selling expenses would be only two-thirds of their present amount. What is Andreti's fivolidabie cost per unit it should compare to the price quoted by the outside manufacturer? Complete this question by entering your answers in the tabs below. Assume Andretti Company has sufficlent capacity to produce 110,700 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 35% above the present 82,000 units each year if it increased fixed selling expenses by $110,000. What is the financial advantage (disadvantage) of investing an additional $110,000 in fixed selling expenses? novid Mrdetti clase the plant far two manths? cost per unit it shoild compare to the price quoted by the outside manufacturer? Complete this question by entering your answers in the tabs below. Assume Andretti Company has sufficient capacity to produce 110,700 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 35% above the present 82,000 units esch year it If increased fred selling expenses by $110,000. Would the additional invertment be pustined? Complete this question by entering your answers in the tabs below. Assume Andretti Company has sufficient capacity to produce 110,700 Daks each yeat, A customer in a forelon market wants to purchase 28.700 Daks. If Andretti occepts this order, It would pay import duties on the Daks of $2.70 ber unit and an cost. What is the break-even price per unit on this order? Noter Round your answers to 2 decirnal places. iow much totai contribution margin wil Arsare tu forge if it cioses the plant for two monstis? cost per timit it should compare to the price quoted by the outsido manufacturer? Complete this question by entering your answers in the tabs below. The company has 500 Daks on hand with some irregularities that make it impossible to seil them at the normal price through tegular distribution ctsanneis. What unit cost figure is celevant for setting a minum seling price to liquidate these units? Noter Round your answer to 2 decimal places. menc: both Complete this question by entering your answers in the tabs below. Oule to a strike in its supplier's plant, Andretti Company is unable to purchase more material for the production of Oaks. The strike is expected to last for two months. Andretti company has enough material on hand to operate at 25% of notmal ievels closed, fixed manufacturing overhead costs would continue at 35% of their normat level durino the two month period and tive fixed selling expenses would be reduced by 20% during the two-month period. Note: Round number of units produced to the nearest whole number. Round your intermindiate calculations and finel answiers to 2 decimal places. Any losises 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 foxed cost will the company avoid if it closes the plant for two months? c. What is the financlal advantage (disadvantage) of closing the plant for the two-month period? complete this question by entering your answers in the tabs below. Required IA Required is Bequired 2 Required 3 Required 4A to Required 40 Required 5 months? Show less A Required 4A to 4C Required 5 unit it should compore to the price quoted by the outside impinufocturen? Complete this question by entering your answers in the tabs below. An outside manufacturer offered to produce 62,000 Daks and ship them directly to Andrettis cubtomers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle: however, nxed manufacturing overtieed costs would be reduced by 75%. Because the outside manufacturer would pav for all shipotno costs, the variable seling expenses would be only two-thirds of their present amount. What is Andretti's avoldable cost per unit it should compare to ithe price quoted by the outside manufacturer? Note: Do not round intermediate calculations. Round your answers to 2 decimal places Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started