Question

In: Accounting

Andretti Company has a single product called a Dak. The company normally produces and sells 60,000...

Andretti Company has a single product called a Dak. The company normally produces and sells 60,000 Daks each year at a selling price of $32 per unit. The company’s unit costs at this level of activity are given below:

Direct materials $10.00 Direct labor 4.50 Variable manufacturing overhead 2.30 Fixed manufacturing overhead 5.00 ($300,000 total) Variable selling expenses 1.20 Fixed selling expenses 3.50 ($210,000 total) Total cost per unit $26.50

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 30% 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 60% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two-month period. Required: 1. Utilizing Excel, create a spreadsheet. Display your results using the total cost approach. Utilize formulas for all calculations.

Solutions

Expert Solution

Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!
Andretti
Variable cost per unit Note
Direct Materials                10.00 A
Direct Labor                   4.50 B
Variable Manufacturing overhead                   2.30 C
Variable Selling Expenses                   1.20 D
Total Variable cost per unit                18.00 E=A+B+C+D
Sell Price Per unit                32.00 F
Contribution Per unit                14.00 G=F-E
Number of Units         60,000.00 H
Contribution amount      840,000.00 I=G*H
Fixed cost
Fixed manufacturing overhead      300,000.00 J
Fixed selling expenses      210,000.00 K
Plant close Amount $
Fixed manufacturing overhead at 60%         30,000.00 L=J/12*2*60%
Fixed selling expenses at 80%         28,000.00 M=K/12*2*80%
Total cost incurred if plant closed        58,000.00
30% capacity Amount $
Number of units           3,000.00 N=H/12*2*30%
Contribution Per unit                14.00 See G
Contribution earned        42,000.00 O=N*G
Fixed manufacturing overhead         50,000.00 P=J/12*2
Fixed selling expenses         35,000.00 Q=K/12*2
Net Income        43,000.00 R=O-P-Q
So Andretti should not close the plant for two months but operate it at 30% capacity.

Related Solutions

Andretti Company has a single product called a Dak. The company normally produces and sells 60,000...
Andretti Company has a single product called a Dak. The company normally produces and sells 60,000 Daks each year at a selling price of $32 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 10.00 Direct labor 4.50 Variable manufacturing overhead 2.30 Fixed manufacturing overhead 5.00 ($300,000 total) Variable selling expenses 1.20 Fixed selling expenses 3.50 ($210,000 total) Total cost per unit $ 26.50 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 60,000...
Andretti Company has a single product called a Dak. The company normally produces and sells 60,000 Daks each year at a selling price of $32 per unit. The company’s unit costs at this level of activity are given below: Direct materials $10.00 Direct labor 4.50 Variable manufacturing overhead 2.30 Fixed manufacturing overhead 5.00 ($300,000 total) Variable selling expenses 1.20 Fixed selling expenses 3.50 ($210,000 total) Total cost per unit $26.50 Due to a strike in its supplier’s plant, Andretti Company...
Andretti Company has a single product called a Dak. The company normally produces and sells 60,000...
Andretti Company has a single product called a Dak. The company normally produces and sells 60,000 Daks each year at a selling price of $32 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 10.00 Direct labor 4.50 Variable manufacturing overhead 2.30 Fixed manufacturing overhead 5.00 ($300,000 total) Variable selling expenses 1.20 Fixed selling expenses 3.50 ($210,000 total) Total cost per unit $ 26.50 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 60,000...
Andretti Company has a single product called a Dak. The company normally produces and sells 60,000 Daks each year at a selling price of $32 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 10.00 Direct labor 4.50 Variable manufacturing overhead 2.30 Fixed manufacturing overhead 5.00 ($300,000 total) Variable selling expenses 1.20 Fixed selling expenses 3.50 ($210,000 total) Total cost per unit $ 26.50 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 81,00...
Andretti Company has a single product called a Dak. The company normally produces and sells 81,000 Daks each year at a selling price of $58 per unit. The company’s unit costs at this level of activity are given below:Required:1-a. Assume that Andretti Company has sufficient capacity to produce 101,250 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 81,000 units each year if it were willing...
Andretti Company has a single product called a Dak. The company normally produces and sells 81,00...
Andretti Company has a single product called a Dak. The company normally produces and sells 81,000 Daks each year at a selling price of $60 per unit. The company’s unit costs at this level of activity are given below:Direct materials$8.50Direct labor11.00Variable manufacturing overhead3.10Fixed manufacturing overhead4.00($324,000 total)Variable selling expenses4.70Fixed selling expenses3.50($283,500 total)Total cost per unit$34.80A number of questions relating to the production and sale of Daks follow. Each question is independent.Required:1-a. Assume that Andretti Company has sufficient capacity to produce 105,300...
Andretti Company has a single product called a Dak. The company normally produces and sells 88,000...
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 $60 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 7.50 Direct labor 10.00 Variable manufacturing overhead 3.20 Fixed manufacturing overhead 3.00 ($264,000 total) Variable selling expenses 3.70 Fixed selling expenses 3.50 ($308,000 total) Total cost per unit $ 30.90 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 82,000...
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 $62 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 6.50 Direct labor 10.00 Variable manufacturing overhead 3.50 Fixed manufacturing overhead 5.00 ($410,000 total) Variable selling expenses 3.70 Fixed selling expenses 4.00 ($328,000 total) Total cost per unit $ 32.70 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 81,000...
Andretti Company has a single product called a Dak. The company normally produces and sells 81,000 Daks each year at a selling price of $60 per unit. The company’s unit costs at this level of activity are given below: Direct Materials: $6.50 Direct Labor: $10 Variable Manufacturing Overhead: $3.50 Fixed manufacturing overhead: $9.00 ($729,000 Total) Variable selling expenses: $2.70 Fixed selling expenses: $3.50 ($283,500 Total) Total Cost per Unit: $35.20 Required 1-a. Assume that Andretti Company has sufficient capacity to...
Andretti Company has a single product called a Dak. The company normally produces and sells 84,000...
Andretti Company has a single product called a Dak. The company normally produces and sells 84,000 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 $ 8.50 Direct labor 10.00 Variable manufacturing overhead 2.70 Fixed manufacturing overhead 9.00 ($756,000 total) Variable selling expenses 4.70 Fixed selling expenses 2.50 ($210,000 total) Total cost per unit $ 37.40 A number of questions relating to the production...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT