Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

will you rase help me out with the five required questions Check my work Problem 11-18 Relevant Cost Analysis in a variety of Situations [LO11-2,

will you rase help me out with the five required questions image text in transcribed
image text in transcribed
Check my work Problem 11-18 Relevant Cost Analysis in a variety of Situations [LO11-2, LO11-3, LO11-4) Andretti Company has a single product called a Dak. The company normally produces and sells 83,000 Daks each year at a seling price of $58 per unit. The company's unit costs at this level of activity are given below. Direct materials Direct labor Variable mangfacturing overhead Fixed manufacturing overhead Variable selling expenses Tixed selling expenses Total cost per unit $8.50 12.00 3.80 7.00 (5581,000 total) 4.70 3.50 (5290,500 total) $39.50 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 99,600 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 20% above the present 83,000 units each year if it were willing to increase the foed selling expenses by $140,000. What is the financial advantage disadvantage of investing an additional $140,000 in fixed selling expenses? 1-b. Would the additional investment be justified? 2. Assume again that Andretti Company has sufficient capacity to produce 99,600 Daks each year. A customer in a foreign market wants to purchase 16,600 Doks. If Andrett accepts this order it would have to pay import duties on the Daks of $170 per unit and an additional $9,960 for permits and licenses. The only selling costs that would be associated with the order would be $1.60 per unit Shipping cost. What is the break-even price per unit on this order? 3. The company has 500 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 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 feed selling expenses would be reduced by 20% durino the two-month period.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To AccountingAn Integrated Approach

Authors: Penne Ainsworth, Dan Deines

8th Edition

1119600103, 9781119600107

More Books

Students also viewed these Accounting questions

Question

=+What would you say if the person were in front of you?

Answered: 1 week ago

Question

=+ How could you make it more engaging and entertaining?

Answered: 1 week ago