Topeka Company has a single product called Topek. The company normally produces and sells 80,000 Topeks each year. The company's unit costs at this level of activity are given below: Variable manufacturing cost Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $23.30 5.00 1.70 4.50 $ 34.50 One of the materials used in the production of Topeks is obtained from a foreign supplier. Civil unrest in the supplier's country has caused a cutoff in material shipments that is expected to last for one year. Topeka Company has enough material on hand to operate at 50% of normal levels for one year. As an alternative, the company could close the plant down entirely for one year. Closing the plant would reduce fixed manufacturing overhead costs by 30% and the fixed selling expenses would continue at two-thirds of their normal level during the one-year period. What is the selling price per unit of Topek that would make the company indifferent between (i) closing the plant and (ii) not closing the plant for one year? A. $25.00 В. $29.30 С. $31.00 D. $47.50 Е. None of the above

Futura Company purchases 80,000 starters from a supplier at $9.90 per unit that it installs in farm tractors. Due to a reduction in output, the company now has enough idle capacity to produce the starters rather than buying them from the supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $10.80, as shown below: Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Per Unit Total $ 4.00 2.20 1.90 $ 152,000 1.50 $ 120,000 0.70 0.50 $ 10.80 $ 40,000 Rent Total product cost If Futura decides to make the starters, a supervisor would be hired (at a salary of $152,000) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $87,000 per period. Required: What is the financial advantage (disadvantage) of making the…

Futura Company purchases the 66,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $12.10 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $13.10 as shown below: Direct materials. Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total product cost Per Unit $ 7.00 2.20 1.80 1.20 0.40 0.50 $ 13.10 Total $ 118,800 $ 79,200 $ 33,000 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $118,800) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant and can't be avoided. The total rent on the plant is $81,000…

Futura Company purchases the 68.000 starters that it installs in its standard line of farm tractors from a supplier for the price of $11.00 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $11.60 as shown below: Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total product cost Per Unit $5.00 2.80 1.70 1.00 0.20 0.40 $11.60 Total $ 115,600 $ 68,000 $ 27,200 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $115,600) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $84,000 per period.…