1-a. :
Contribution margin per unit = $ 58 - $ ( 7.50 + 9.00 + 2.10 + 4.70 ) = $ 34.70
Financial advantage | $ 1,067,560 |
Financial advantage = Incremental Contribution Margin - Incremental Fixed Costs = 87,000 x 0.40 x $ 34.70 - $ 140,000 = $ 1,067,560.
1-b. Yes.
2. Ans. : $ 24.60
Variable manufacturing costs | $ 18.60 |
Import duties | 3.70 |
Permits and licenses ( $ 24,360 / 34,800 ) | 0.70 |
Shipping cost | 1.60 |
Break-even price per unit | $ 24.60 |
3. $ 4.70.
All manufacturing costs are sunk costs, and therefore not relevant. Fixed selling expenses cannot be avoided, and therefore are not relevant. Variable selling expenses are the only relevant costs for setting a minimum selling price.
4.
a. | Contribution margin that the company will forego | 87,000 x 2/12 x 25 % x $ 34.70 | $(125,787.50) |
b. | Total fixed costs that will be avoided | 522,000 x 2/12 x 65 % + 217,500 x 2/12 x 20 % | 63,800 |
c. | Financial disadvantage of closing the plant for 2 months | $(61,987.50) | |
d. | No. |
5. $ 21.97
Variable manufacturing costs | $ 18.60 |
Fixed manufacturing overhead ( $ 6.00 x 30 % ) | 1.80 |
Variable selling expenses ( $ 4.70 x 1/3 ) | 1.57 |
Avoidable cost per unit | $ 21.97 |
Andretti Company has a single product called a Dak. The company normally produces and sells 87,000...
Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 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 2.90 Fixed manufacturing overhead 9.00 ($783,000 total) Variable selling expenses 3.70 Fixed selling expenses 3.50 ($304,500 total) Total cost per unit $ 38.60 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 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 $ 7.50 Direct labor 11.00 Variable manufacturing overhead 2.20 Fixed manufacturing overhead 5.00 ($435,000 total) Variable selling expenses 3.70 Fixed selling expenses 3.00 ($261,000 total) Total cost per unit $ 32.40 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $54 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 7.50 Direct labor 11.00 Variable manufacturing overhead 2.80 Fixed manufacturing overhead 6.00 ($522,000 total) Variable selling expenses 3.70 Fixed selling expenses 4.00 ($348,000 total) Total cost per unit $ 35.00 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $40 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 3.50 Fixed manufacturing overhead 7.00 ($609,000 total) Variable selling expenses 1.70 Fixed selling expenses 4.50 ($391,500 total) Total cost per unit $ 34.20 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 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 86,000 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 $ 7.50 Direct labor 10.00 Variable manufacturing overhead 2.30 Fixed manufacturing overhead 6.00 ($516,000 total) Variable selling expenses 4.70 Fixed selling expenses 3.00 ($258,000 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 86,000 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 $ 7.50 Direct labor 10.00 Variable manufacturing overhead 2.30 Fixed manufacturing overhead 4.00 ($344,000 total) Variable selling expenses 2.70 Fixed selling expenses 4.50 ($387,000 total) Total cost per unit $ 31.00 A number of questions relating to the production...
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