Andretti Company has a single product called a Dak. The companynormally produces and sells 81,000 Daks each year at a sellingprice of $60 per unit. The company’s unit costs at this level ofactivity are given below:

Direct materials	$	6.50
Direct labor		11.00
Variable manufacturing overhead		3.70
Fixed manufacturing overhead		7.00	($567,000 total)
Variable selling expenses		3.70
Fixed selling expenses		3.00	($243,000 total)
Total cost per unit	$	34.90

A number of questions relating to the production and sale ofDaks follow. Each question is independent.

Required:

2. Assume again that Andretti Company has sufficient capacity toproduce 105,300 Daks each year. A customer in a foreign marketwants to purchase 24,300 Daks. If Andretti accepts this order itwould have to pay import duties on the Daks of $4.70 per unit andan additional $17,010 for permits and licenses. The only sellingcosts that would be associated with the order would be $2.30 perunit shipping cost. What is the break-even price per unit on thisorder?

4. Due to a strike in its supplier’s plant, Andretti Company isunable to purchase more material for the production of Daks. Thestrike is expected to last for two months. Andretti Company hasenough material on hand to operate at 25% of normal levels for thetwo-month period. As an alternative, Andretti could close its plantdown entirely for the two months. If the plant were closed, fixedmanufacturing overhead costs would continue at 35% of their normallevel during the two-month period and the fixed selling expenseswould be reduced by 20% during the two-month period. (Round numberof units produced to the nearest whole number. Round yourintermediate 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 itcloses the plant for two months?
b. How much total fixed cost will the company avoid if it closesthe plant for two months?
c. What is the financial advantage (disadvantage) of closing theplant for the two-month period?

	Forgone contribution margin $ Total avoidable fixed costs $ Financial advantage (disadvantage) $

5. An outside manufacturer has offered to produce 81,000 Daksand ship them directly to Andretti’s customers. If Andretti Companyaccepts this offer, the facilities that it uses to produce Dakswould be idle; however, fixed manufacturing overhead costs would bereduced by 30%. Because the outside manufacturer would pay for allshipping costs, the variable selling expenses would be onlytwo-thirds of their present amount. What is Andretti’s avoidablecost per unit that it should compare to the price quoted by theoutside manufacturer?

	Avoidable cost perunit $