PLEASE HELP ME SOLVE QUESTIONS 4&5 ONLY! Andretti Company has a single product c

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PLEASE HELP ME SOLVE QUESTIONS 4&5 ONLY!

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 $42 per unit. The company’s unit costs at this level of activity are given below:

    A number of questions relating to the production and sale of Daks follow. Each question is independent.

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 $42 per unit. The company’s unit costs at this level of activity are given below:

3. The company has 900 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 unit cost figure is relevant for setting a minimum selling price? (Round your answer to 2 decimal places.) t unit per unit 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%. What would be the impact on profits of closing the plant for the two-month period? (Enter losses/reductions with a minus sign. Round intermediate calculations to 2 decimal places. Round number of units calculation and final answers to nearest whole number.) Contribution margin lost Fixed costs Fixed manufacturing overhead cost Fixed selling cost Net disadvantage of closing the plant

Explanation / Answer

3. Minimum selling price should be set at total variable cost per unit of $ ( 6.50 + 12 + 2.20 + 4.70) = $ 25.40

4.

5.

$ Contribution margin lost ( 13,000 x $16.60) 215,800 Reduction in fixed costs Fixed manufacturing overhead costs 76,050 Fixed selling cost 11,700 Net disadvantage of closing the plant 128,050

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