Global Textiles, Inc., is considering three possible countries for the sole manufacturing site of its newest area rug: Singapore, Brazil, and the United States. All area rugs are to be sold to retail outlets in the United States for $250 per unit. These retail outlets add their own markup when selling to final customers. Fixed costs and variable cost per unit (area rug) differ in the three countries.

Required1. Compute the breakeven point for Global Textiles, Inc., in each country in (a) units sold and (b) revenues.2. If Global Textiles, Inc., plans to produce and sell 75,000 rugs in 2011, what is the budgeted operating income for each of the three manufacturing locations? Comment on theresults.

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Variable Marketing & Distribution Cost per Area Rug Variable Manufacturing Cost per Area Rug Sales Price to Retail Annual Fixed Costs Country Singapore Outlets $250.00 250.00 $ 9,000,000 8,400,000 12,400,000 $75.00 60.00 82.50 $25.00 15.00 Brazil United States 250.00 12.50