Andretti Company has a single product called a Dak. The company normally produces and sells 88,000 Daks each year at a selling price of $60 per unit . The companyâs unit costs at this level of activity are given below : Direct materials $7.50
Direct labor 10.00
Variable manufacturing overhead 1.90
Fixed manufacturing overhead 6.00"
Variable selling expenses 2.70
Fixed selling expenses 3.00 ($264,000 total)
Total cost per unit $35.00

A number of questions relating to the production and sale of Daks follow. Each question is independent.

Required:

a. Assume that Andretti Company has sufficient capacity to produce 114,400 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 88,000 units each year if it were willing to increase the fixed selling expenses by $140,000. What is the financial advantage (disadvantage) of investing an additional $140,000 in fixed selling expenses?

b. Would the additional investment be justified?

c. Assume again that Andretti Company has sufficient capacity to produce 114,400 Daks each year. A customer in a foreign market wants to purchase 26,400 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $1.70 per unit and an additional $18,480 for permits and licenses. The only selling costs that would be associated with the order would be $2.00 per unit shipping cost. What is the break-even price per unit on this order?