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Braided Rugs, Inc., is considering three possible countries for the sole manufacturing site of its newest area rug: Singapore, Italy, and Brazil. All area rugs
Braided Rugs, Inc., is considering three possible countries for the sole manufacturing site of its newest area rug: Singapore, Italy, and Brazil. All area rugs are to be sold to retail outlets in the United States for $290 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. Country Singapore Italy Variable Marketing Sales Price to Annual Fixed Variable Manufacturing and Distribution Cost Retail Outlets Costs Cost per Area Rug per Area Rug $ 290.00 $ 6,984,000 $ 105.00 $ 5.00 290.00 4,768,000 120.00 10.00 290.00 8,497,500 110.00 15.00 Brazil X Requirements 1. Compute the breakeven point for Braided Rugs, Inc., in each country in (a) units sold and (b) revenues. 2. If Braided Rugs, Inc., plans to produce and sell 90,000 rugs in 2020, what is the budgeted operating income for each of the three manufacturing locations? Comment on the results
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