Contribution margin per Dak = selling price per Dak - variable cost per Dak
= 64 - 8.5-8-3-3.7
=$40.8
1.additional contribution margin = 18000*40.8 =$734,400
Less: additional cost =$100,000
Net benefit =$634,400
Yes
2.break even price =8.5+8+3+3.7+2.1+ 14400/18000
=$26.1 per unit
3. Relevant cost is the variable selling cost since manufacturing cost has already been incurred
I.e. $3.70 per unit
4.operating level = 90,000*25%*2/12 =3,750 units
A. Contribution margin lost =3750*40.8 =$153,000
B. Fixed costs avoided = 360,000*65%*2/12 + 360,000*20%*2/12
=$51,000
C. Advantage = 51000- 153,000 =$(102000)
D.should not close
5. Avoidable cost = 8.5+8+3+ 3.7*2/3 + 360,000*30%/90,000
=$23.17 per unit
the Week 11 Problems * Andretti Company has a single product called a Dak. The company normally produces and sells...
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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 10.00 2.80 9.00 ($720,000 total) 2.70 4.00 ($320,000 total) $37.00 A number of questions relating to the production and...
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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 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $ 9.50 11.00 3.50 9.00 ($774,000 total) 4.70 4.50 $387,000 total) $42.20 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 88,000 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 3.80 9.00 ($792,000 total) 2.70 4.50 ($396,000 total) $ 35.50 A number of questions relating to the production...