Question

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 sale of Daks follow. Each question is independent.

Answer 1

Answer 1-a

Financial advantage

$                   826,450

Explanation:

Increased Sales in units	$   25,500
Contribution margin per unit	$     37.90
Incremental Contribution	$ 966,450
Added Fixed expense	$ 140,000
Incremental net income	$ 826,450

Answer 1-b

Yes

Explanation:

As there is a financial advantage of $ 826,450.

Answer 2

Break-even price per unit

$     26.20

Explanation:

Variable manufacturing Cost per Unit	$     19.40
Import duties per unit	$        4.70
Permits	$        0.60
Shipping Cost	$        1.50
Break-even price per unit	$     26.20

Answer 3

Relevant unit cost

$                         4.70

Explanation:

Only Variable selling cost is considered. This is because all other costs are already incurred and are irrelevant for decision making.

**As per HOMEWORKLIB RULES, only the first four parts have been answered. Please post the remaining parts as a separate question.**

In case of any doubt, please comment.