Management is considering relocating its manufacturing

Assignment Help Accounting Basics

Reference no: EM13595532

Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relates to the period just ended when the company produced and sold 42,000 speaker sets:

Sales $3,360,000
Variable Costs 840,000
Fixed Costs 2,280,000

Management is considering relocating its manufacturing facilities to Northern Mexico to reduce costs. Variable costs are expected to average $18 per set; annual fixed costs are anticipated to be $1,984,000. (Ingors income taxes)

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 remain in the United States.
a) If variable costs remain constant, what must management do to fixed costs? By how much must fixed costs change?
b) If fixed costs remain constant, what must management do to the variable cost per unit? By how much must unit variable cost change?

4. Determine the impact (increase, decrease, or no effect) of the following operating changes.
a) Effect of an increase in direct material costs on the break-even point
b) Effect of an increase in fixed administration costs on the unit contribution margin.
c) Effect of an increase in the un it contribution margin on net income.
d) Effect of an decrease in the number of units sold on the break even point.

Reference no: EM13595532

Questions Cloud

Indicate if each transaction and events is a source of cash : indicate if each transaction and events is a source of cash a use of cash andor an adjustment leading to a source or

Husky enterprises recently sold an issue of 10-year : husky enterprises recently sold an issue of 10-year maturity bonds. the bonds were sold at a deep discount price of

Write complete ionic and net ionic equation for the : write complete ionic and net ionic equation for the following reaction lithium sulfate and strontium chloride.express

Welch company which expects to start operations on january : welch company which expects to start operations on january 1 2011 will sell digital cameras in shopping malls. welch

Management is considering relocating its manufacturing : houston-based advanced electronics manufactures audio speakers for desktop computers. the following data relates to the

How can the high electrical and thermal conductivities of : how can the high electrical and thermal conductivities of metals be explained by electron gas model of metallic

Explain why allocation is needed based on this information : production workers for bianco manufacturing company provided 3600 hours of labor in january and 1900 hours in february.

Fogel co expect to produce 16000 units for the year the : fogel co expect to produce 16000 units for the year the company flexible budget for 116000 units of production shows

Write a balanced molecular equation and a net ionic : write a balanced molecular equation and a net ionic equation for the reaction of solid aluminum hydroxide with a

User Account

All Pages