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Andretti Company has a single product called a Dak. The company normally produces and sells 85,000 Daks each year at a sellinRequired: 1-a. Assume that Andretti Company has sufficient capacity to produce 110,500 Daks each year without any increase in

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Answer #1

Answer 1-a

Financial advantage $                   826,450

Explanation:

Increased Sales in units $   25,500
Contribution margin per unit $     37.90
Incremental Contribution $ 966,450
Added Fixed expense $ 140,000
Incremental net income $ 826,450

Answer 1-b

Yes

Explanation:

As there is a financial advantage of $ 826,450.

Answer 2

Break-even price per unit $     26.20

Explanation:

Variable manufacturing Cost per Unit $     19.40
Import duties per unit $        4.70
Permits $        0.60
Shipping Cost $        1.50
Break-even price per unit $     26.20

Answer 3

Relevant unit cost $                         4.70

Explanation:

Only Variable selling cost is considered. This is because all other costs are already incurred and are irrelevant for decision making.

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