Calculation of contribution margin per Dak | ||
Selling price | 62 | |
Less: variable costs | ||
Direct Material | 9.5 | |
Direct Labor | 9 | |
Variable Overhead | 3.2 | |
Variable Selling Expenses | 3.7 | |
Total Variable cost | 25.4 | |
Contribution Margin per Unit | 36.6 | |
1-a Financial Advantage = Additional contribution Margin - Increased expenses | ||
=20,500*36.6– 130,000 = $620,300 | ||
1-B yes, since benefit | ||
2.Calculation of break even price | ||
Direct Material | 9.5 | |
Direct Labor | 9 | |
Variable Overhead | 3.2 | |
Import Duties | 1.7 | |
Selling expenses | 1.7 | |
Total variable cost | 25.1 | |
Break even price = 25.1 + 12300/20500 = $25.7 | ||
3.Relevant cost is the variable selling expense since manufacturing cost has already been incurred i.e. $3.70 per unit | ||
Operating level = 82,000*25%*2/12 = 3416.67 units | ||
4-a. Contribution margin foregone = 3416.67*36.6 = $125,050.12 | ||
4-b Fixed cost avoided = 328,000*65%*2/12 + 246,000*20%*2/12 = $43,733.33 | ||
c.Advantage of closing = 43,733.33-125,050.12 = $(81,316.79) i.e. disadvantage | ||
d.No, should not be closed | ||
5.Calculation of avoidable cost | ||
Direct Material | 9.5 | |
Direct Labor | 9 | |
Variable Overhead | 3.2 | |
Avoidable Fixed manufacturing overhead | 1.2 | |
Variable selling expenses avoided | 1.233 | |
Avoidable cost per unit | 24.13 |
Andretti Company has a single product called a Dak. The company normally produces and sells 82,000...
Andretti Company has a single product called a Dak. The company normally produces and sells 82,000 Daks each year at a selling price of $58 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 Variable selling expenses Fixed selling expenses Total cost per unit $ 6.50 10.00 2.00 4.00 ($328,000 total) 3.70 3.50 ($287,000 total) $29.70 A number of questions relating to the production and...
Andretti Company has a single product called a Dak. The company normally produces and sells 82,000 Daks each year at a selling price of $58 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 Variable selling expenses Fixed selling expenses Total cost per unit $ 6.50 10.00 2.00 4.00 ($328,000 total) 3.70 3.50 ($287,000 total) $29.70 A number of questions relating to the production and...
Andretti Company has a single product called a Dak. The company normally produces and sells 82,000 Daks each year at a selling price of $64 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 7.50 Direct labor 10.00 Variable manufacturing overhead 3.80 Fixed manufacturing overhead 10.00 ($820,000 total) Variable selling expenses 2.70 Fixed selling expenses 3.00 ($246,000 total) Total cost per unit $ 37.00 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 82,000 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 Variable selling expenses Fixed selling expenses Total cost per unit $ 8.50 10.00 2.70 7.00 ($574,000 total) 1.70 3.00 ($246,000 total) $32.90 A number of questions relating to the production and...
Andretti Company has a single product called a Dak. The company normally produces and sells 82,000 Daks each year at a selling price of $64 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 7.50 Direct labor 10.00 Variable manufacturing overhead 2.00 Fixed manufacturing overhead 4.00 ($328,000 total) Variable selling expenses 4.70 Fixed selling expenses 4.00 ($328,000 total) Total cost per unit $ 32.20 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 82,000 Daks each year at a selling price of $56 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 8.50 Direct labor 11.00 Variable manufacturing overhead 3.80 Fixed manufacturing overhead 4.00 ($328,000 total) Variable selling expenses 2.70 Fixed selling expenses 4.50 ($369,000 total) Total cost per unit $ 34.50 A number of questions relating to the production...
year Andretti Company has a single product called a Dak. The company normally produces and sells 84,000 Daks each selling price of $58 per unit. The company's unit costs at this level of activity are given below: $ 7.50 ON Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit ($420,000 total) 2.50 ($210,000 total) $29.00 $29.00 A number of questions relating to the production and sale of Daks follow....
Andretti Company has a single product called a Dak. The company normally produces and sells 82,000 Daks each year at a selling price of $48 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 9.50 Direct labor 9.00 Variable manufacturing overhead 2.80 Fixed manufacturing overhead 6.00 ($492,000 total) Variable selling expenses 2.70 Fixed selling expenses 3.50 ($287,000 total) Total cost per unit $ 33.50 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 88,000 Daks each year at a selling price of $64 per unit. The company's unit costs at this level of activity are given below: points Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $ 9.50 11.00 1.80 7.00 ($616,000 total) 2.70 4.00 ($352,000 total) $36.00 eBook A number of questions relating to the...
Andretti Company has a single product called a Dak. The company normally produces and sells 85,000 Daks each year at a selling price of $62 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 Variable selling expenses Fixed selling expenses Total cost per unit $ 7.50 9.00 2.90 7.00 ($595,000 total) 4.70 3.50 ($297,500 total) $34.60 A number of questions relating to the production and...