Question: Need help with 4 and 5 Problem 10-18A Relevant Cost Analysis in a Variety of Situations [LO10-2, LO10-3, LO10 Andretti Company has a single product
Problem 10-18A Relevant Cost Analysis in a Variety of Situations [LO10-2, LO10-3, LO10 Andretti Company has a single product called a Dak. The company normally produces and sells 75,000 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 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses $ 9.50 10.00 2.00 5.00 ($375.000 total) 2.70 6.50 ($487.500 total) Total cost per unit S 35.70 A number of questions relating to the production and sale of Daks follow. Each question is independent Required: 1-a. Assume that Andretti Company has suficient capacity to produce 97,500 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 30% above the present 75,000 units each year if it were willing to increase the fixed selling expenses by $150.000. Calculate the incremental net operating income. (Round all dollar amounts to 2 decimal places.) Increased sales in units Contribution margin per unit Incremental contribution margin Less added fixed selling expense Incremental net operating income 22,500 S 23.80 535,500.00 150,000.00 385.500.00
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