An American-based manufacturing company produces speakers for computers. The following data relate to the period just ended when the company produced and sold 43,000 speaker sets:

Sales $ 3,440,000

Variable costs 860,000

Fixed costs 2,250,000

Management is considering relocating its manufacturing facilities to Peru to reduce costs. Variable costs are expected to average $18.00 per set; annual fixed costs are anticipated to be $1,994,000. (In the following requirements, ignore income taxes.)

Required: Assume that management desires to achieve the Peruvian break-even point (confirmed to be 32,161 speaker sets); however, operations will remain in the United States: If variable costs remain constant, by how much must fixed costs decrease?