Could you please answer (a) question correctly. If variable costs remain constant, by how much must fixed costs change? (Round your intermediate unit calculations to the nearest whole number and round your final answer to the nearest whole dollar.) **Case Study: Cost Analysis for Advanced Electronics**Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 44,000 speaker sets:- **Sales:** $3,608,000- **Variable Costs:** $902,000- **Fixed Costs:** $2,310,000**Scenario: Relocation and Cost Analysis**Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected to average $18.00 per set, and annual fixed costs are anticipated to be $1,986,000. For this analysis, ignore income taxes.**Requirements:**1. **Current Income Calculation:** - Determine the company’s current income. - Calculate the dollar sales needed to double that income, assuming a price of $18.00 per set.2. **Break-even Point in Mexico:** - Determine the break-even point in speaker sets if operations are shifted to Mexico.3. **Achieving Mexican Break-even in the U.S.:** - Assume management desires to achieve the Mexican break-even point but will remain in the U.S. - **a.** If variable costs remain constant, calculate the required change in fixed costs. - **b.** If fixed costs remain constant, calculate the required change in the variable cost per unit.4. **Impact of Operating Changes:** - Determine the impact (increase, decrease, or no effect) of various operating changes.**Analysis Instructions:**Complete your analysis by entering your answers in the provided tabs. Use rounded calculations as specified:- **a.** Round intermediate unit calculations to the nearest whole number and final answers to the nearest dollar.- **b.** Round intermediate unit calculations to the nearest whole number and final answers to two decimal places. **Financial Analysis Update**- **Fixed Costs:** It is projected that fixed costs will experience a decrease. The amount of reduction is estimated to be **$401,579**.

Fixed cost is the cost which is defined as the one that does not change or varies with decrease or…

Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 44,000 speaker sets: Sales Variable costs Fixed costs $3,608,000 902,000 2,310,000 Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected to average $18.00 per set; annual fixed costs are anticipated to be $1,986,000. (In the following requirements, ignore income taxes.) Required: 1. Calculate the company's current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States. 2. Determine the break-even point in speaker sets if operations are shifted to Mexico.

Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 44,000 speaker sets: Sales Variable costs Fixed costs $3,608,000 902,000 2,310,000 Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected to average $18.00 per set; annual fixed costs are anticipated to be $1,986,000. (In the following requirements, ignore income taxes.) Required: 1. Calculate the company's current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States. 2. Determine the break-even point in speaker sets if operations are shifted to Mexico.

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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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

Could you please answer (a) question correctly.

If variable costs remain constant, by how much must fixed costs change? (Round your intermediate unit calculations to the nearest whole number and round your final answer to the nearest whole dollar.)

**Case Study: Cost Analysis for Advanced Electronics**

Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 44,000 speaker sets:

- **Sales:** $3,608,000
- **Variable Costs:** $902,000
- **Fixed Costs:** $2,310,000

**Scenario: Relocation and Cost Analysis**

Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected to average $18.00 per set, and annual fixed costs are anticipated to be $1,986,000. For this analysis, ignore income taxes.

**Requirements:**

1. **Current Income Calculation:**
- Determine the company’s current income.
- Calculate the dollar sales needed to double that income, assuming a price of $18.00 per set.

2. **Break-even Point in Mexico:**
- Determine the break-even point in speaker sets if operations are shifted to Mexico.

3. **Achieving Mexican Break-even in the U.S.:**
- Assume management desires to achieve the Mexican break-even point but will remain in the U.S.
- **a.** If variable costs remain constant, calculate the required change in fixed costs.
- **b.** If fixed costs remain constant, calculate the required change in the variable cost per unit.

4. **Impact of Operating Changes:**
- Determine the impact (increase, decrease, or no effect) of various operating changes.

**Analysis Instructions:**

Complete your analysis by entering your answers in the provided tabs. Use rounded calculations as specified:

- **a.** Round intermediate unit calculations to the nearest whole number and final answers to the nearest dollar.
- **b.** Round intermediate unit calculations to the nearest whole number and final answers to two decimal places.

**Financial Analysis Update**

- **Fixed Costs:** It is projected that fixed costs will experience a decrease. The amount of reduction is estimated to be **$401,579**.

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