Payne has an opportunity to shift production overseas the

Reference no: EM13481607

Payne Co. sells shoes which are made in the USA. Current data for the last month was as follows:

Average Selling Price $65
Variable Cost Per Unit $35
Monthly Fixed Costs $75,000
Units Sold 5,000

Payne has an opportunity to shift production overseas. The overseas manufacturer would charge a monthly charge of $50,000 to make all of the shoes thus lowering the variable costs to the commissions of 10% of sales. Payne would still have the fixed costs listed above as well as the new manufacturing fixed costs.

Required

Complete the chart below with the original data as well as if the changes are made.
Current Situation
With Changes
Cost Per Unit
Net Income
Break-Even in Units
Units for Net Income of $50,000
What should Payne do? Consider non-financial aspects as well as the changes in accounting data.

Reference no: EM13481607

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Payne has an opportunity to shift production overseas the

Reference no: EM13481607

Reference no: EM13481607

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