Reference no: EM132999219

Andretti Company produces and sells 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 manufacturing 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 related to the production and sale of Daks follow. Each question is independent.

Problem 1. Assume that Andretti Company has sufficient capacity to produce 90,000 Daks each year. A customer in a foreign market would like to purchase 20,000 Daks. If Andretti accepts this order, it would have to pay import duties on the Daks of $1.70 per unit and an additional $9,000 for permits and licenses. The variable selling costs associated with the special order would increase to $3.20 per unit. What is the selling price that Andretti would need to charge to breakeven on this order?