3-31 CVP analysis, international cost structure differences. Braided Rugs, Inc., is considering threepossible countries for the sole manufacturing site of its newest area rug: Italy, Portugal, and Thailand. Allarea rugs are to be sold to retail outlets in the United States for $250 per unit. These retail outlets add theirown markup when selling to final customers. Fixed costs and variable cost per unit (area rug) differ in thethree countries.VariableVariableManufacturingCost perArea RugMarketing &Distribution CostAnnualSales PriceFixedto RetailCostsOutletsCountryPortugalItalyper Area Rug$7,500,000$45.00$250.00$10.005,000,00065.00250.0015.009,000,00055.00250.00Thailand20.001. 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 80,000 rugs in 2017, what is the budgeted operatingincome for each of the three manufacturing locations? Comment on the results.

Answered: 3-31 CVP analysis, international cost…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Activity-Based Supplier Costing Bowman Company manufactures cooling systems. Bowman produces all the parts necessary for its product except for one electronic component, which is purchased from two local suppliers: Manzer Inc. and Buckner Company. Both suppliers are reliable and seldom deliver late; however, Manzer sells the component for $89 per unit, while Buckner sells the same component for $86. Bowman purchases 80% of its components from Buckner because of its lower price. The total annual demand is 4,000,000 components. To help assess the cost effect of the two components, the following data were collected for supplier-related activities and suppliers: I. Activity Data Inspecting components (sampling only) Reworking products (due to failed component) Warranty work (due to failed component) II. Supplier Data Unit purchase price Units purchased Sampling hours* Rework hours Warranty hours Manzer Inc. Manzer Inc. Buckner Company $89 800,000 104.83 X per unit 92.36✔ per unit 80 360…
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