311 Chapter 7 Cost-Volume-Profit Analysis f video disks. aur Problem 7-37 here 10 percent incre Ho -based Advanced Electronics manufactures audio speakers 1o 42 000 speaker sets: ing relate to the period just ended when the company produceda The follow- CVP Analysis, Impact of nges (LO 7-1, 7-4) e con year to maintain ins at $16? $3.360,000 rice r 2. Break-even point: 32,000 840,000 sts ice f ie coming year an isk must Disk City 2,280,000 F sts ce pe Maanent is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Varole costs are expected to average $18 per set; annual fixed costs are anticipated to be $1,984,000. (In he following requirements, ignore income taxes.) equirements (1), (2), and (3 changes: the selling price Requed 1.Calculate the company's current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain the United States 2 Determine the break-even point in speaker sets if operations are shifted to Mexico. 3. Assume that management desires to achieve the Mexican break-even point; however, operations the year just ended at ans and variable marketing co and $72,000 for marketing will remain in the United States a. If variable costs remain constant, what must management do to fixed costs? By how much must fixed costs change? f fixed costs remain constant, what must management do to the variable cost per unit? By b. how much must unit variable cost change? year. 4Determine the impact (increase, decrease, or no effect) of the following operating changes. of $180,000 during the y Effect of an increase in direct material costs on the break-even point. a ase by 10 percent in the c coming year. Effect of an increase in fixed administrative costs on the unit contribution margin. b. Effect of an increase in the unit contribution margin on net income percent, compute the selling ng year Effect of a decrease in the number of units sold on the break-even point d. mponent insertion syste ems follow ed