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Houston - based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and
Houstonbased Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold speaker sets:
Sales $
Variable costs
Fixed costs
Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected to average $ per set; annual fixed costs are anticipated to be $In the following requirements, ignore income taxes.
Required:
Calculate the companys current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States.
Determine the breakeven point in speaker sets if operations are shifted to Mexico.
Assume that management desires to achieve the Mexican breakeven point; however, operations will remain in the United States.
If variable costs remain constant, by how much must fixed costs change?
If fixed costs remain constant, by how much must unit variable cost change?
Determine the impact increase decrease, or no effect of the following operating changes.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the companys current income we subtract the total variable costs and fixed costs from the sales revenue Current Income Sales Variable cos...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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