I need help with this question please! Thank you Andretti Company has a single product called a Dak. The company normally produces and sells 84,000 Daks each year at a sellingprice of $62 per unit. The company's unit costs at this level of activity are given below:Direct materials$ 6.50Direct labor8.00Variable manufacturing overheadFixed manufacturing overheadVariable selling expensesFixed selling expenses1.9010.00($840,000 total)3.704.50( $378,000 total)Total cost per unit$ 34.60A 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 113,400 Daks each year without any increase in fixedmanufacturing overhead costs. The company could increase its unit sales by 35% above the present 84,000 units each year if it werewilling to increase the fixed 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 113,400 Daks each year. A customer in a foreign marketwants to purchase 29,400 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $2.70 per unit and anadditional $26,460 for permits and licenses. The only selling costs that would be associated with the order would be $2.20 per unitshipping cost. What is the break-even price per unit on this order?3. The company has 400 Daks on hand that have some irregularities and are therefore considered to be "seconds." Due to theirregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What is the unit costfigure 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 isexpected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-monthperiod. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturingoverhead costs would continue at 40% of their normal level during the two-month period and the fixed selling expenses would bereduced by 20% during the two-month period.a. How much total contribution margin wilI 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 84,000 Daks and ship them directly to Andretti's customers. If Andretti Companyaccepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would bereduced 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 outsidemanufacturer? 1-b. Would the additional investment be justified?2. Assume again that Andretti Company has sufficient capacity to produce 113,400 Daks each year. A customer in a foreign marketwants to purchase 29,400 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $2.70 per unit and anadditional $26,460 for permits and licenses. The only selling costs that would be associated with the order would be $2.20 per unitshipping cost. What is the break-even price per unit on this order?3. The company has 400 Daks on hand that have some irregularities and are therefore considered to be "seconds." Due to theirregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What is the unit costfigure 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 isexpected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-monthperiod. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturingoverhead costs would continue at 40% of their normal level during the two-month period and the fixed selling expenses would bereduced by 20% during the two-month 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 84,000 Daks and ship them directly to Andretti's customers. If Andretti Companyaccepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would bereduced 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 outsidemanufacturer?Complete this question by entering your answers in the tabs below.Req 1AReq 1BReq 2Req 3Req 4A to 4CReq 4DReq 5Assume that Andretti Company has sufficient capacity to produce 113,400 Daks each year without any increase in fixedmanufacturing overhead costs. The company could increase its unit sales by 35% above the present 84,000 units each year ifit were willing to increase the fixed selling expenses by $140,000. What is the financial advantage (disadvantage) of investingan additional $140,000 in fixed selling expenses?Show lessA< Req 1AReq 1B>

As per the guidelines, we are supposed to answer only the first 3 sub-parts of the question. As per…

Andretti Company has a single product called a Dak. The company normally produces and sells 84,000 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 8.00 1.90 10.00 Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses ($840,000 total) 3.70 4.50 ($378,000 total) Total cost per unit $ 34.60 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 113,400 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 35% above the present 84,000 units each year if it were willing to increase the fixed 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 113,400 Daks each year. A customer in a foreign market wants to purchase 29,400 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $2.70 per unit and an additional $26,460 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 400 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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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