Due to a strike in its suppliers plant andretti company is

Assignment Help Accounting Basics

Reference no: EM13598750

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 $48 per unit. The company's unit costs at this level of activity are given below:

Direct materials $8.90
Direct labor 9.00
Variable manufacturing overhead 2.10
Fixed manufacturing overhead 5.00 ($390,000 total)
Variable selling expenses 1.50
Fixed selling expenses 6.60 ($514,800 total)
Total cost per unit $33.10

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 60% of their normal level during the two-month period and the fixed selling expenses would be reduced by 25%. What would be the impact on profits of closing the plant for the two-month period?

Reference no: EM13598750

Questions Cloud

On january 1 2009 american eagle borrows 90000 cash by : on january 1 2009 american eagle borrows 90000 cash by signing a four-year 5 installment note. the note requires four

Lexicon inc had beginning inventory in march consisting of : lexicon inc. had beginning inventory in march consisting of 15000 units 60 percent converted and ending inventory

During 2010 ly company disposed of two different assets on : during 2010 ly company disposed of two different assets. on january 1 2010 prior to their disposal the accounts

Phil owns a ranch business and uses four-wheelers to do : phil owns a ranch business and uses four-wheelers to do much of his work. occasionally though he and his boys will go

Due to a strike in its suppliers plant andretti company is : andretti company has a single product called a dak. the company normally produces and sells 78000 daks each year at a

Home repair corphrc operates a building maintenance and : home repair corphrc operates a building maintenance and repair business. the business has three office employees- a

In addition jose incurred the following expenses before : jose purchased a delivery van for his business through an online auction. his winning bid for the van was 37500. in

What would be bobs basis in the warehouse and in the land : wanting to finalize a sale before year-end on december 29 wr outfitters sold to bob a warehouse and the land for

The company has 500 daks on hand that have some : andretti company has a single product called a dak. the company normally produces and sells 78000 daks each year at a

User Account

All Pages