ouston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period st ended when the company produced and sold 45,000 speaker sets: Sales Variable costs Fixed costs $3,690,000 922,500 2,250,000 anagement is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected verage $18.00 per set; annual fixed costs are anticipated to be $1,994,000. (In the following requirements, ignore income taxes.) equired: Calculate the company's current income and determine the level of dollar sales needed to double that figure, assuming that anufacturing operations remain in the United States. Determine the break-even point in speaker sets if operations are shifted to Mexico. Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United State 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.
ouston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period st ended when the company produced and sold 45,000 speaker sets: Sales Variable costs Fixed costs $3,690,000 922,500 2,250,000 anagement is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected verage $18.00 per set; annual fixed costs are anticipated to be $1,994,000. (In the following requirements, ignore income taxes.) equired: Calculate the company's current income and determine the level of dollar sales needed to double that figure, assuming that anufacturing operations remain in the United States. Determine the break-even point in speaker sets if operations are shifted to Mexico. Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United State 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Aa.11.
Transcribed Image Text: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 45,000 speaker sets:
Sales
Variable costs
Fixed costs
$3,690,000
922,500
2,250,000
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 $1,994,000. (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.
3. Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United States.
a. If variable costs remain constant, by how much must fixed costs change?
b. If fixed costs remain constant, by how much must unit variable cost change?
4. Determine the impact (increase, decrease, or no effect) of the following operating changes.
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