Costs Assignment

Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just end ed when the company productiveness 42,000 speaker sets:
Sales................................................................................................................................ $3,360,000
Variable costs................................................................................................................... 840,000
Fixed costs.........................................................................................................................2,280,000
Management  is  considering relocating its manufacturing facilitiest onorthern Mexico to reduce costs.
Variable costs are expected to average $18 per set; annual fixed costs are anticipated to be $1,984,000.
(Inthefollowingrequirements, ignoreincometaxes.)
Required:
1.Calculate the company- current income and determine the level of dollar sales needed to double
That figure, assuming that manufacturing operations remain in the UnitedStates.
2.Determine thebreak-even point in speaker sets if operations are shifted to Mexico.
3.Assume that management desires to achieve the Mexicanbreak-evenpoint; however, operations
Will remainin the United States.
a.Ifvariablecostsremainconstant, whatmustmanagementdotofixedcosts? Byhowmuch
mustfixedcostschange?
b.If fixed costs remain constant, what must management do to thevariable cost per unit? By
how much must unit variable cost change?
4.Determine the impact (increase, decrease, ornoeffect) ofthefollowingoperatingchanges.
a.Effectofanincreaseindirectmaterialcostsonthebreak-evenpoint.
b.Effectofanincreaseinfixedadministrativecostsontheunitcontributionmargin.
c.Effectofanincreaseintheunitcontributionmarginonnetincome.
d.Effectof a decreaseinthenumberofunitssoldonthebreak-evenpoint.