ONLY NEED HELP WITH THE QUESTIONS POSTED BELOW PROBLEM DESCRIPTION-THANKS!
Calculation of contribution margin per Dak |
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Selling price |
62 |
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Less: variable costs |
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Direct Material |
7.5 |
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Direct Labor |
10 |
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Variable Overhead |
2.40 |
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Variable Selling Expenses |
1.70 |
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Total Variable cost |
21.6 |
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Contribution Margin per Unit |
40.4 |
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1-a Financial Advantage = Additional contribution Margin - Increased expenses |
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=17,200*40.4 - 140,000 = $554,880 |
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1-B yes, since benefit |
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2.Calculation of break even price |
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Direct Material |
7.5 |
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Direct Labor |
10 |
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Variable Overhead |
2.4 |
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Import Duties |
2.70 |
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Selling expenses |
2.50 |
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Total variable cost |
25.1 |
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Break even price = 25.1 + 10320/17200 = $25.7 |
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3.Relevant cost is the variable selling expense since manufacturing cost has already been incurred i.e. $1.7 per unit |
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Operating level = 86,000*25%*2/12 = 3583.33 units |
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4-a. Contribution margin foregone = 3583.33*40.4 = $144,766.53 |
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4-b Fixed cost avoided = 688,000*70%*2/12 + 301,000*20%*2/12 = $90,300 |
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c.Advantage of closing = 90,300-144,766.53 = -$54,466.53 i.e. disadvantage |
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d.No, should not close |
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5.Calculation of avoidable cost |
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Direct Material |
7.50 |
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Direct Labor |
10 |
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Variable Overhead |
2.4 |
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Avoidable Fixed manufacturing overhead |
2.4 |
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Variable selling expenses avoided |
0.57 |
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Avoidable cost per unit |
22.87 |
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ONLY NEED HELP WITH THE QUESTIONS POSTED BELOW PROBLEM DESCRIPTION-THANKS! Andretti Company has a single product...
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Andretti Company has a single product called a Dak. The company normally produces and sells 80,000 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 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $ 8.50 11.00 3.70 10.00 ($800,000 total) 3.70 3.00 ($240,000 total) $39.90 A number of questions relating to the production and...
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