Andretti Company has a single product called a Dak. The companynormally produces and sells 88,000 Daks each year at a sellingprice of $42 per unit. The companyâs unit costs at this level ofactivity are given below:
Directmaterials $ 7.50 Direct labor 9.00 Variablemanufacturing overhead 1.90 Fixed manufacturingoverhead 7.00 ($616,000 total) Variable sellingexpenses 1.70 Fixed sellingexpenses 5.50 ($484,000 total) Directmaterials $ 7.50 Direct labor 9.00 Variablemanufacturing overhead 1.90 Fixed manufacturingoverhead 7.00 ($616,000 total) Variable sellingexpenses 1.70 Fixed sellingexpenses 5.50 ($484,000 total) Total cost per unit. 32.60
4. Due to a strike in its supplierâs 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 30% of their normallevel during the two-month period and the fixed selling expenseswould be reduced by 20%. What would be the impact on profits ofclosing the plant for the two-month period? (Enterlosses/reductions with a minus sign. Round all calculations(intermediate and final) to whole numbers. Round unit calculationsto whole numbers.)
5. An outside manufacturer has offered to produce Daks and shipthem directly to Andrettiâs customers. If Andretti Company acceptsthis offer, the facilities that it uses to produce Daks would beidle; however, fixed manufacturing overhead costs would be reducedby 30%. Because the outside manufacturer would pay for all shippingcosts, the variable selling expenses would be only two-thirds oftheir present amount. Compute the unit cost that is relevant forcomparison to the price quoted by the outside manufacturer.(Do not round intermediate calculations.Round your answer to 2 decimal places.)
Andretti Company has a single product called a Dak. The companynormally produces and sells 88,000 Daks each year at a sellingprice of $42 per unit. The companyâs unit costs at this level ofactivity are given below:
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