Solution 1-a: | ||
Computation of Contribution Margin per unit | ||
Selling price per unit | 60.00 | |
Less: variable expenses: | ||
Direct materials | 7.50 | |
Direct labor | 8.00 | |
Variable manufacturing Overhead | 3.10 | |
Variable selling expense | 2.70 | 21.30 |
Contribution margin per unit | 38.70 | |
Increased Sales In units (90000*30%) | 27000 | |
Contribution margin per unit | $38.70 | |
Incremental Contribution margin | $1,044,900.00 | |
Less: Added Fixed selling expense | $130,000.00 | |
Incremental Net Operating Income | $914,900.00 |
Solution 1-b: |
Yes, Additional investment would be justified. |
Solution 2: | |
Variable Manufacturing Cost per unit | $18.60 |
Import Duties per unit | $2.70 |
Permits and licenses ($21,600/27000) | $0.80 |
Shipping cost per unit | $2.20 |
Break even price per unit | $24.30 |
Solution 3: | |
Relevant unit cost (Variable selling expesne) | $2.70 |
Solution 4: (a, b, c, d) | |
Units for two months (90000*25%*2/12) | 3750 |
Contribution margin per unit | $39 |
Contribution margin forgone (a) | $145,125 |
Fixed costs: | |
Fixed manufacturing overhead cost (720000*2/12*65%) | $78,000 |
Fixed selling cost ($270000*2/12*20%) | $9,000 |
Total Fixed cost Avoidance (b) | $87,000 |
Net Advantage (disadvantage) of closing the plant (c )= b-a | -$58,125 |
Should Andretti close the plant for Two months? (d) | No |
Solution 5: | |
Variable manufacturing cost | 18.60 |
Fixed manufacturing overhead cost ($8*30%) | 2.40 |
Variable selling expense ($3*1/3) | 1.00 |
Total Costs Avoided | 22.00 |
Andretti Company has a single product called a Dak. The company normally produces and sells 90,000...
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...
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 $58 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 8.50 Direct labor 10.00 Variable manufacturing overhead 2.60 Fixed manufacturing overhead 6.00 ($540,000 total) Variable selling expenses 4.70 Fixed selling expenses 3.00 ($270,000 total) Total cost per unit $ 34.80 A number of questions relating to the production...
help ! 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 $62 per unit. The company's unit costs at this level of activity are given below: $ 6.50 Direct materials Direct labor 8.00 Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses 3.70 7.00 ($630,000 total) 4.70 4.50 $405,000 total) $34.40 Total cost per unit A number of questions relating to the...
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 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...
Andretti Company has a single product called a Dak. The company normally produces and sells 81,000 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 $ 8.50 11.00 2.60 4.00 ($324,000 total) 4.70 4.00 ($324,000 total) $ 34.80 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 81,000 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 $ 9.50 10.00 3.60 3.00 ($243,000 total) 3.70 3.00 ($243,000 total) $32.80 A number of questions relating to the production and...
Andretti Company has a single product called a Dak. The company normally produces and sells 89,000 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 $ 6.50 9.00 3.10 5.00 $445,000 total) 3.70 3.00 ($267,000 total) $ 30.30 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 $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 $ 9.50 9.00 3.20 4.00 ($328,000 total) 3.70 3.00 ($246,000 total) $32.40 A number of questions relating to the production and...