Andretti Company | |||||
1-a Calculation Of incremental Income | |||||
Revenue :- | |||||
S.P p.u | 62 | ||||
Expenses :- | |||||
DM | 6.5 | ||||
DL | 8 | ||||
Var. Mfg. OH | 3.7 | ||||
Var. Selling and Adm. Exp. | 4.7 | ||||
Total expenses | 22.9 | ||||
Contribution margin p.u | 39.1 | ||||
Increased sale in units | 27000 | ||||
Contribution Margin per unit | 39 | ||||
Incremental Contribution Margin | 10,55,700 | ||||
Less:- Fixed Selling expenses | 1,00,000 | ||||
Net incremental Income | 9,55,700 | ||||
yes, the increased fixed expenses would be justified. | |||||
2 - Break even price | |||||
Variable Mfg. cost per unit | 18.2 | ( 6.5 + 8 + 3.7 ) | |||
Import duties per unit | 2.7 | ||||
Cost for permits and licenses | 0.6 | 16200/ | 27000 | ||
Shipping costs per unit | 1.4 | ||||
Break even price per unit | 22.9 | ||||
3- Relevant Cost | |||||
DM | Sunk cost | ||||
DL | Sunk cost | ||||
Var. Mfg. OH | Sunk cost | ||||
Var. Selling and Adm. Exp. | 4.7 | ||||
Minimum selling price | 4.7 | ||||
4 - Impact on profits | If the company operates at 25 % Level | ||||
Net operating loss at 25 % | 25875 | Units produced = 90000 * 2/12 = 15000 * 25 %= 3750 units | |||
If compnay is closed down | The profit that can be earned on these units | ||||
Fixed manufacturing OH cost ( 105000 * 35 %) | 36750 | Contribution margin = 3750 * 39.1 = $ 146625 | Answer a | ||
Fixed Selling cost ( 67500 * 80 %) | 54000 | Less:- Fixed manufacturing OH = 630000 * 2/12 = 105000 | |||
Total Loss incurred by closing down the plant | 90750 | Fixed selling expenses = 405000 * 2/12 = 67500 | |||
Net disadvantage of closing the plant | -64875 | Answer c | Net loss incurred = 25875 | ||
no, it should not close the plant | Answer d | Answer b - ( 105000 + 67500 ) - 90750 = 81750 | |||
5- relevant cost | |||||
Variable Mfg. cost per unit | 18.2 | ( 6.5 + 8 + 3.7 ) | |||
Fixed mfg. OH cost ( 7 * 30 % ) | 2.1 | ||||
Var. Selling and Adm. Exp. ( 4.7 * 1/3 ) | 1.57 | ||||
Total costs avoided | 21.87 |
help ! Andretti Company has a single product called a Dak. The company normally produces and...
Andretti Company has a single product called a Dak. The company normally produces and sells 90,000 Daks each year at a selling price of $60 per unit. The company's unit costs at this level of activity are given below: points Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $ 7.50 8.00 3.10 8.00 ($720,000 total) 2.70 3.00 ($ 270,000 total) $32.30 eBook Print A number of questions relating...
Andretti Company has a single product called a Dak. The company normally produces and sells 90,000 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 $ 7.50 8.00 3.10 8.00 ($720,000 total) 2.70 3.00 ($270,000 total) $32.30 Book Print A number of questions relating to the...
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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 84,000 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 $ 6.50 9.00 2.50 4.60 ($336,000 total) 4.70 3.00 ($252,000 total) $ 29.70 A number of questions relating to the production...
Save & Exit 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 $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 11.00 2.20 6.00 (5480,000 total) 3.70 4.00 ($320,000 total) $35.40 A number of questions relating to...
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...