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Andreti Company has a single product called a Dak. The company normally produces and sells 86,000 Daks each year at a selling price of $56 per unit The company's unit costs at this level of activity are given below: A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1.a. Assume that Andreti Company has sutficient capacity to produce 107,500 Daks each year without any increase in foxed manufacturing overhead costs. The compony could increase its unit sales by 25% above the present 86,000 units each year if it were willing to increase the fived selling expenses by $110,000. What is the finaricial advantage (disadvantage) of investing an additional $110,000 in fived telling expenses? 1. Would the additional investment be justified? 2. Aswime again that Andreti Company has sufficient capacity to produce 107,500 Daks each yeat. A customer in a forelgn market wante to purchase 21.500 Doks. if Andietti accepts thes order it would have to pay import dutes on the Daks of $370 per unit and an additional 519350 for petmits and licenses. The only seling costs that would be associated with the order would be $1. 80 per unut shigping cout Whan is the bieak-even price per unit on this order? 3. The company has 500 Daks on hand that have some inregularises and are therefore considered to be "seconds." Due to the irepulatites, it will be impossible to seli these units at the normal price thiough regular distribution channels. What is the unit cont figure that is reievant for setting a minimum seling price? 4. Due to as strike in ths supplier's piont, Andietu Compony is unable to purchase more material for the proctuction of Daks. The strise is epected to last lor two montin Andieti Company hos enough miaterial on hand to operate at 25x of normal levels for the two-monts ieduced by 20 woidd continue as aon of thei Andretti Company has a single product called a Dak. The company normally produces and sells 86,000 Daks each year at a selling price of $56 per unit. The company's unit costs at this level of activity are given below: A number of questions relating to the production and sale of Daks follow. Each question is independent, Required: 1-3. Assume that Andretti Company has sufficient capacity to produce 107.500 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 86,000 units each year if it were willing to increase the foxed selling 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 justified? 2. Assume again that Andretti Company has sufficient capacity to produce 107,500 Daks each year. A customer in a foreign market wants to purchase 21,500 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $3.70 per unit and an additional $19,350 for permits and licenses. The only selling costs that would be associated with the order would be $1.80 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 ifregularities 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 o minimum selling price? 4. Due to a strike in its suppiier's plant. Andretti Company is unable to purchase more material for the production of Daks. The strike is expecled 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 30% of their normal level during the two-month period and the fixed selling expenses would be reduced 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 idisadvantage) of closing the plant for the two-month penod? d. Should Andretti elose the plant for two months? 5. An outside manufacturer has offered to produce 86,000 Daks and ship them directly to Andrent's customers if Andretti Company accepts this offer the facilities that it uses to produce Daks would be idle; however, fixed manufactuning overheod costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the varlable seling expenses would be only two. thites of theif present amount. What is Andrett's avoidable cost per unit that it should compare to the paice quoted by the outside manufactures? Crimnlete this nuestion to enterina vaur answars in the tahs hafow. reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be c thirds of their present amount What is Andretti's avoidable cost per unit that if should compare to the price quoted by the outs manufacturer? Complete this question by entering your answers in the tabs below. Assume that Andretti Company has sufficient capacity to produce 107,500 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 86,000 units each year if it were willing to increase the fixed selling expenses by $110,000. What is the financial advantage (disadvantage) of investing an additional $110,000 in fixed selling expenses? 5. An outside manufacturer has offered to produce 86,000 Daks and ship them ditectly to Andretti's customers. If Andretti Compa accepts this offer, the facilities that it uses to produce Daks would be lide, however, fixed manufacturing overhead costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only thirds of their present amount. What is Andreti's avoldable cost per unit that it should compare to the price quoted by the outside manufacturer? Complete this question by entering your answers in the tabs below. Assume that Andretti Company has sufficient capacity to produce 107,500 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 86,000 units each year if It were willing to increase the fixed selling expenses by $110,000. Would the additional investment be justified? Why and ship them directly to Andrettis customers, If Andretti Compu reduced by 30%. Because the outside manufacturer would pay f be ide however, fixed manufacturing overhead costs would be thirds of their present amount. What is Andrettis avoidable cost for all shipping costs, the variable selling expenses would be only manufacturer? Complete this question by entering your answers in the tabs below. Assume again that Andretti Compainy has sufficient capacity to produce 107,500 Daks each year, A customer in a foreign market wants to purchase 21,500 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $3.70 per unit and an additional $19,350 for permits and licenses. The only selling costs that would be associated with the order would be $1.80 per unit shipping cost. What is the break-even price per unit on this order? (Round your answers to 2 decimal places.) 5. An outside manufacturer has offered to produce 86.000 Daks and ship them tirectly to Andrettis customers. If Andrelti Comp accepts this offer, the facilities 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 thirds of their present amount. What is Andrettis avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? Complete this question by entering your arhwers in the tabs below. 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? (Round your answer to 2 decimal places.) dwepis this ofter, the facilities that it uses to produce Daks would be diles however. fixed manufacturing overhead costs would reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be o thirds of their present amount. What is Andrettis avoidable cost per unit that it should compare to the price quoted by the outs manufacturer? 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 Companx has enough material on hand to operate at 25% of normal levels for the two-month period. As an altemative. Andretti could close its plant down entirely for the two months, If the plant were closed, fixed manufacturing overhead costs would continue at 30% 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/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? accepts this offer, the facilities that it uses reduced by 30%. Because the outside manufacturer Daks would be idle: however, fixed manufacturing overhead costs wou thirds of their present amount. What is Andrettis avour would pay for all shipping costs, the variable selling experises would be manufacturer? 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 30% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two-month period. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 86,000 Daks and ship them directly to Andrett's customers. If Andretti Cor accepts this offer, the facilities that it uses to produce Daks would be idle. however, fixed manufacturing overhead costs would reduced by 30%, Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be o thirds manufacturer? Complete this question by entering your answers in the tabs below. An outside manufacturer has offered to produce 86,000 Daks and ship them directly to Andretti's customers. If Andretti Company accepts this offer, the facilities 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 variable selling to the price quoted by the outside man their present amount. What is Andretti's avoidable cost per unit that it should compare places.)