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: $ 10.00 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses 4.50 2.30 5.00 ($300,000 total) 1.20 3.50 ($210,000 total) Total cost per unit $ 26.50 A number of questions relating to the production and sale of Daks follow. Each question is independent.
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Question & Answer: Andretti Company has a single product called a Dak. The company normally produces and sells 60,000 Daks…..
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|Variable production costs||16.8|
|Fixed manufactuirng overhead cost||3.75||=(300000*75%)/60000|
|Variable selling expenses||0.8||=1.2/3*2|
|Total costs avoided||21.35|