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Andretu Company has a single product called a Dak. The company normally produces and sells 89,000 Daks each year at a selling price of $62 per unit. The company's unft costs at this level of activity are given below. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $ 7.50 11.00 3.70 4.60 ($356,680 total) 4.70 4.50 (5400, 500 total) $ 35.40 A number of questions relating to the production and sale of Daks follow. Each question is Independent Required: 1-a. Assume that Andreu Company has sufficient capacity to produce 11.250 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 89.000 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 additional Investment be justified? 2. Assume again that Andrett Company has sufficient capacity to produce 111.250 Daks each year. A customer in a foreign market wants to purchase 22.250 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $17,800 for permits and licenses. The only selling costs that would be associated with the order would be $190 per unit shipping cost. What is the break-even price per unit on this order? 3. The company has 700 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? 4. Due to a strike in its supplier's plant, Andrett Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andrett Company has enough material on hand to operate at 25% of normal levels for the two-month perlod. 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 40% 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 Andrett forgo if it closes the plant for two months? 6. How much total fixed cost will the company avold if it closes the plant for two months? c. What is the financial advantage (disadvantage of closing the plant for the two-month period? d. Should Andretti close the plant for two months? 5. An outside manufacturer has offered to produce 89.000 Daks and ship them directly to Andretti's customers. If Andre Company accepts this offer, the facilities that it uses to produce Daks would be idle: however, fed 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 two- thirds of their present amount What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer An outside manufacturer has offered to produce 89,000 Daks and ship them directly to Andretti's customers. If Andretti Cor cepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would educed by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be or thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outsie manufacturer? Complete this question by entering your answers in the tabs below. Reg 1A Req 1B Reg 2 Req3 Req 4 to 40 Req 40 Reg 5 Assume that Andretti Company has sufficient capacity to produce 111,250 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 89,000 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? Show less Req 18 > duced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would b Irds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the o manufacturer? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 2 Req3 Req 4 to 40 Req 4D Reg 5 Assume that Andretti Company has sufficient capacity to produce 111,250 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 89,000 units each year if it were willing to increase the fixed selling expenses by $130,000. Would the additional investment be justified? TOYes TONO An outside manufacturer nas onterea to produce oyuwu Daks and ship them direcuy to Andretts customers. It Andretti Co ccepts this offer, the facilities that it uses to produce Daks would be Idle; however, fixed manufacturing overhead costs would educed by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be o hirds of their present amount. What is Andretti's avoldable cost per unit that It should compare to the price quoted by the outsi manufacturer? Complete this question by entering your answers in the tabs below. Rea 1 Req 18 Reg 2 Req3 Reg A to 4 Reg 10 Reg 5 Assume again that Andretti Company has sufficient capacity to produce 111,250 Daks each year. A customer in a foreign market wants to purchase 22,250 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $17.800 for permits and licenses. The only selling costs that would be associated with the order would be $1.90 per unit shipping cost. What is the break-even price per unit on this order? (Round your answers to 2 decimal places.) Show less Break-even price per unit Hacilities ulat 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 on thirds of their present amount What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outsi manufacturer Complete this question by entering your answers in the tabs below. Reg 11 Reg 1B Req 2 Reg 3 Reg 4 to 40 Req 4D Reg 5 The company has 700 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.) Relevant unit COSE Unit Complete this question by entering your answers in the tabs below. Reg 1A Req 18 Reg 2 Req3 Reg 4 to 1c Reg 4D Req5 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 40% sf their normal level during the two-month period and the froved selling expenses would be reduced by 20% during the two-mohth 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? Show less Forgone contribution margin Total avoidable fixed costs Financial advantage disadvantage ( Req3 Req4D > ne facilities that it uses to produce Daks would be ldle; however, fixed manufacturing overhead costs duced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would mirds of their present amount What is Andretti's avoldable cost per unit that it should compare to the price quoted by the manufacturer? Complete this question by entering your answers in the tabs below. Req 1A Req 10 Req 2 Req3 Reg 4A to 4C Req 1 Reg 5 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 40% 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? Show less TOYes TONO turer Complete this question by entering your answers in the tabs below. Req 1A Req 18 Req2 Req3 Req 4A to 40 Req 4D 5 An outside manufacturer has offered to produce 89,000 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 expenses would be only two-thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Show less Avoidable cost per unit

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