Plush Decor, Inc., is considering three possible countries for the sole manufacturing site of its newest area rug: Italy, Spain, and Singapore. All area rugs are to be sold to retail outlets in Australia for $200 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.

Required

1. Compute the breakeven point for Plush Decor, Inc., in each country in 

(a) Units sold and 

(b) Revenues.
2. If Plush Decor, Inc., plans to produce and sell 80,000 rugs in 2021, what is the budgeted operating income for each of the three manufacturing locations? Comment on the results.

Transcribed Image Text:

Country Italy Spain Singapore Sales Price to Retail Outlets $200.00 200.00 200.00 Annual Fixed Costs $ 6,386,000.00 5,043,000.00 12,240,000.00 Variable Manufacturing Cost per Area Rug $70.00 61.00 84.00 Variable Marketing & Distribution Cost per Area Rug $27.00 16.00 14.00