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Andretti Company has a single product called a Dak. The company normally produces and sells...

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Accounting

Andretti Company has a single product called a Dak. The company normally produces and sells 81,000 Daks each year at a selling price of $48 per unit. The companys unit costs at this level of activity are given below:

Direct materials $ 8.50
Direct labor 10.00
Variable manufacturing overhead 2.40
Fixed manufacturing overhead 9.00 ($729,000 total)
Variable selling expenses 3.70
Fixed selling expenses 5.50 ($445,500 total)
Total cost per unit $ 39.10
An outside manufacturer has offered to produce Daks and ship them directly to Andrettis customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would be reduced by 75%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two-thirds of their present amount. Compute the unit cost that is relevant for comparison to the price quoted by the outside manufacturer. Variable manufacturing costs: ? Fixed manufacturing overhead cost: ? Variable selling expense: ?

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