Req 1AReq 1BReq 2Break-even price per unitReq 3Req 4A to 4CReq 4DReq 5Assume again that Andretti Company has sufficient capacity to produce 115,700 Daks each year. A customer in a foreignmarket wants to purchase 26,700 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $1.70per unit and an additional $16,020 for permits and licenses. The only selling costs that would be associated with the orderwould be $1.80 per unit shipping cost. What is the break-even price per unit on this order? (Round your answer to 2 decimalplaces.)Show less Andretti Company has a single product called a Dak. The company normally produces and sells 89,000 Daks each year at a sellingprice of $60 per unit. The company's unit costs at this level of activity are given below:Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overheadVariable selling expensesFixed selling expensesTotal cost per unit$ 8.509.002.309.00 ($801,000 total)3.702.50($222,500 total)$35.00A number of questions relating to the production and sale of Daks follow. Each question is independent.

Break-even point is the point where there is no profit or loss. Thus as break-even point the fixed…

Answered: Assume again that Andretti Company has…

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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Meyerson's Bakery is considering the addition of a new line of pies to its product offerings. It is expected that each pie will sell for $15 and the variable costs per pie will be $9. Total fixed operating costs are expected to be $25,000. Meyerson's faces a marginal tax rate of 35%, will have interest expense associated with this line of $3,500, and expects to sell about 4,200 pies in the first year. a. Create an income statement for the pie line's first year. Is the line expected to be profitable? b. Calculate the operating break-even point in both units and dollars. How many pies would Meyerson's need to sell in order to achieve EBIT of $20,000? C. d. Use the Goal Seek tool to determine the selling price per pie that would allow Meyerson's to break even in terms of its net income. e. Calculate the DOL, DFL, and DCL for the new pie line.
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 58,000 Rets per year. Costs associated with this level of production and sales are as follows: Unit Direct materials Direct labour $25.00 18.00 13.00 Total $1,450,000 1,044,000 754,000 1,102,000 19.00 Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense 4.00 232,000 348,000 6.00 Total cost $ 85.00 $4,930,000 The Rets normally sell for $90 each. Fixed manufacturing overhead is constant at $1,102,000 per year within the range of 33,000 through 58,000 Rets per year. Required: 1. Assume that, due to a recession, Polaski Company expects to sell only 33,000 Rets through regular channels next year. A large retail chain has offered to purchase 25,000 Rets if Polaski is willing to accept a price lower than the regular $90. There would be no sales commissions on this order; thus, variable selling expenses would be…
Your storage firm has been offered $96,900 in one year to store some goods for one year. Assume your costs are $95,200, payable immediately, and the cost of capital is 8.1%. Should you take the contract? The NPV will be $ Should you take the contract? The contract (Round to the nearest cent.) be taken (Select from the drop-down menu.)
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.50 per switch. Vista's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Annual fixed costs Variable cost per switch Machine A $632,400 1.78 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 235,000 switches per year and what is the total cost of that alternative? Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Machine B $ 860,100 0.80 Minimum number of switches For each machine, what is the minimum number of switches that…
Hyperion, Inc. currently sells its latest high-speed colour printer, the Hyper 500, for $371. It plans to lower the price to $318 next year. Its cost of goods sold for the Hyper 500 is $212 per unit, and this year's sales are expected to be 21,000 units. a. Suppose that, if Hyperion drops the price to $318 immediately, it can increase this year's sales by 27% to 26,670 units. What would be the incremental impact on this year's EBIT of such a price drop? b. Suppose that, for each printer sold, Hyperion expects additional sales of $78 per year on ink cartridges for the three years, and Hyperion has a gross profit margin of 61% on ink cartridges. What is the incremental impact on EBIT for the next three years of a price drop this year?
"We ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. "At a price of $21 per drum, we would be paying $7.05 less than it costs us to manufacture the drums in our own plant. Because we use 65,000 drums a year, that equals an annual cost savings of $458,250." Antilles Refining's current cost to manufacture one drum is given below (based on 65,000 drums per year): Direct materials Direct labor Variable overhead Fixed overhead ($3.50 general company overhead, $1.95 depreciation, and $0.90 supervision) Total cost per drum A decision about whether to make or buy the drums is especially important at this time because the equipment used to make the drums is completely worn out and must be replaced. The choices facing the company are: Alternative 1: Rent new equipment and continue to make the drums. The equipment would be rented for $175,500 per year. Alternative 2: Purchase the drums from an…
Mueller Corp. manufactures flash drives that sell for $5.00. Fixed costs are $28,000 and variable costs are $3.60 per unit. Mueller can buy a newer production machine that will increase fixed costs by $8,000 per year, and will decrease variable costs by $0.40 per unit. What effect would the purchase of the new machine have on Mueller's break-even point in units?
RG Motors has been approached by a new customer with an offer to purchase 5,000 units of its hand-free, Wi-Fi-enabled automotive model – the SMART, at a price of RM18,000 per automobile. RG’s other sales would not be affected by this new customer offer. RG normally produces 100,000 units of its SMART model per year but only plans to produce and sell 90,000 units in the coming year. The normal sales price is RM35,000 per SMART. Unit cost information for the normal level of activity is as follows: Table 7: Production Costs Total Cost RM Direct materials 10,000 Direct labor 2,000 Variable overhead 4,000 Fixed overhead 8,000 Total 24,000 Fixed overhead will not be affected by whether or not the special order is accepted. Required: (i) List the relevant costs and benefits of the two alternatives of the special order. (ii) Propose whether operating income increase or decrease if the order is accepted with calculation details.
At Blossom Electronics, it costs $33 per unit ($15 variable and $18 fixed) to make an MP3 player that normally sells for $54. A foreign wholesaler offers to buy 4,520 units at $26 each. Blossom Electronics will incur special shipping costs of $1 per unit. Assuming that Blossom Electronics has excess operating capacity, indicate the net income (loss) Blossom Electronics would realize by accepting the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses eg. (45).) Revenues Costs-Variable manufacturing Shipping Net income The special order should be Reject Order $ $ Accept Order Net Income Increase (Decrease) $ $ $ $
The Lamar Company manufactures wiring tools. The company is currently producing well below its full capacity. The Boston Company has approached Lamar with an offer to buy 15,000 tools at $1.80 each. Lamar sells its tools wholesale for $1.90 each; the average cost per unit is $1.88, of which $0.32 is fixed costs. If Lamar were to accept Boston's offer, what would be the increase in Lamar's operating profits? Multiple Choice O O $1,500. $5,100. $1,200. $3,600.
Marigold Corp. is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $27 and Marigold would sell it for $60. The cost to assemble the product is estimated at $13 per unit and the company believes the market would support a price of $64 on the assembled unit. What decision should Marigold make and why? Sell before assembly because the company will be better off by $9 per unit. Sell before assembly because the company will be better off by $4 per unit. Process further because the company will be better off by $18 per unit. Process further because the company will be better off by $20 per unit.
Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $12.00 per chain. The variable cost for a chain, including the wholesale cost of the chain, packaging, the commission paid to the airport operator, and so on, is $10.40. The annual fixed cost for GGN is $15,000. Required: a. How many cases must Golden Gate Novelties sell every year to break even? Note: Do not round intermediate calculations. b. The owner of GGN believes that the company can sell 12,500 chains a year. What is the margin of safety in terms of the number of chains? a. Break-even point b. Margin of safety chains chains

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