Question

Andretti Company has a single product called a Dak. The company normally produces and sells 89,000 Daks each year at a selling price of $56 per unit. The company’s unit costs at this level of activity are given below:

 

Answer 1

Suppose that    

Direct materials $7

Direct labor $9.00 

Variable manufacturing overhead $4

Fixed manufacturing overhead $10.00 ($890 000 total) 

Variable selling expenses $4

Fixed selling expenses $5 ($445 000 total) 

Total cost per unit $39.00

$Profit=Income-expenses=89000\times(56-39)=1 513 000$