Andretti Company has a single product called a Dak. The company normally produce
ID: 2348027 • Letter: A
Question
Andretti Company has a single product called a Dak. The company normally produces and sells 78,000 Daks each year at a selling price of $48 per unit. The company's unit costs at this level of activity are given below:Direct materials $8.90
Direct labor 9.00
Variable manufacturing overhead 2.10
Fixed manufacturing overhead 5.00 ($390,000 total)
Variable selling expenses 1.50
Fixed selling expenses 6.60 ($514,800 total)
Total cost per unit $33.10
Assume again that Andretti Company has sufficient capacity to produce 97,500 Daks each year. A customer in a foreign market wants to purchase 14,500 Daks. Import duties on the Daks would be $1.30 per unit, and costs for permits and licenses would be $10,000. The only selling costs that would be associated with the order would be $1.00 per unit shipping cost. Compute the per unit break-even price on this order.
Explanation / Answer
profit= 48-33.10 = 14.9/unit total cost of 97500 daks = 14500*1.30+10000+1*14500= 43350 cost per unit = 43350/14500= 3.99 break even will be=48-3.99= 45.01