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Andretti Company has a single product called a Dak. The company normally produces and sells 81,000 Dakar each year at a selling price of $60 per unit.

Problem 12-18 Relevant Cost Analysis in a Variety of Situations [L012-2, L012-3, Lo12-4) Andretti Company has a single product called a Dak. The company normally produces and sells 81,000 Daks each year at a selling price of $60 per unit. The company's unit costs at this level of activity are given below Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 8.50 11.00 2.70 9.00 ($729,900 total) .70 3.50 ($283,500 total) Fixed selling expenses Total cost per unit $37.40 A number of questions relating to the production and sale of Daks follow. Each question is independent 1-a Assume that Andretti Company has sufficient capacity to produce 109,350 Daks each year without any increase in fixed manufacturing overhead costs The company could increase its unit sales by 35% above the present 81,000 units each year if it were willing to increase the fixed selling expenses by $130,000. What is the financial advantage (disadvantage) of investing an additional $130,000 in fixed selling expenses 1-b. Would the investment be justified? 2 Assume again that Andretti Company has sufficient capacity to produce 109.350 Daks each year. A customer in a foreign market wants to purchase 28,350 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $1.70 per unit and an additional $22680 for permits and licenses. The only selling costs that would be associated with the order would be $140 per unit cost. What is the break-even price per unit on this order? has 800 Daks on hand that have some irregularities and are therefore considered to be "seconds."Due to the 3. The co irregularities, it will be fiqure that is relevant for setting a minimum selling price? to sell these units at the normal price through regular distribution channels. What is the unit cost

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