Please do requerment 3 , 4 and 5 3 Problem 12-18 Relevant Cost Analysls In a Var
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Question
Please do requerment 3 , 4 and 5
3 Problem 12-18 Relevant Cost Analysls In a Varlety of Sltuatlons [LO12-2, L012-3, L012-4] 10 oints Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $50 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 $ 7.58 12.88 3.68 eBook 4.88 ($348,838 total) 1.78 5.58 ($478,588 total) Print $34.38 RererencesA number of questions relating to the production and sale of Daks follow. Each question is independent. ulred: ssufficient capacity to produce 108.750 Daks each year w rease in fxed manotacturing overhead costs. Tle co willing toincrease the fixed selli g expenses by $40,000. What is le financial advantage (disad ántage) o $140,000 in ed selling expenses? 1-b. Would the a ditional invEstment be jued ove the preser2 81,00 units ean year if it were g an additional Assume again thst Andyétti Companyasufficient capacity to roduce 108,750 Daks ach year. A custo er in foreign market nts to purchase 21, Daks. If And étti atcepts this oder it woud have to pay imp addhjonal $19,575 for shipp 3. The company has 600 Daks on hand tnat nave some irregularities and are therefore considered to be "seconds." Due to the irregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What is the unit cost figure that is relevant for setting a minimum selling price? 4. Due to a strike in its supplier's plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 35% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two-month period. a. How much total contribution margin will Andretti forgo if it closes the plant for two months? b. How much total fixed cost will the company avoid if it closes the plant for two months? c. What is the financial advantage (disadvantage) of closing the plant for the two-month period? d. Should Andretti close the plant for two months? its and IiLenses. The only séllin woU ated with the would be 230 per unit the -even price per un s order? 5. An outside manufacturer has offered to produce 87,000 Daks and ship them directly to Andretti's customers. lf Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle: however, fixed manufacturing overhead costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two- thirds of their present amount. What is Andretti's avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? Complete this question by entering your answers in the tabs below 1B Req 3 Req 4A to 4C Req 4D Req 5 The company has 600 Daks on hand that have some irregularities and are therefore considered to be "seconds." Due to the irregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What is the unit cost figure that is relevant for setting a minimum selling price? (Round your answer to 2 decimal places.) per unitExplanation / Answer
3) Relevant unit cost 1.7 per unit 4) Contribution margin lost (87000*25%*2/12)*25.20 -91,350 Fixed costs fixed manufacturing overhead cost(348000*65%*2/12) 37,700 fixed selling cost (478500*20%*1/2) 15,950 53,650 Net Disadvantage of closing the plant -37700 5) Variable manufacturing costs 23.10 Fixed manufacturing overhead cost(348000*30%)/87000 1.20 Variable selling expense (1.7*1/3) 0.57 total costs avoided 24.87