Andretti Company has a single product called a Dak. The company normally produces and sells...
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Accounting
| Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $40 per unit. The companys unit costs at this level of activity are given below: |
| Direct materials | $ | 6.50 | |
| Direct labor | 10.00 | ||
| Variable manufacturing overhead | 2.60 | ||
| Fixed manufacturing overhead | 9.00 | ($783,000 total) | |
| Variable selling expenses | 3.70 | ||
| Fixed selling expenses | 3.50 | ($304,500 total) | |
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| Total cost per unit | $ | 35.30 | |
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| Required: |
| 1. | 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 unit cost figure is relevant for setting a minimum selling price? (Round your answer to 2 decimal places.) |
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