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Question: area rugsinc is considering three possible countries for the sole...

Question details

Area Rugs​,​Inc., is considering three possible countries for the sole manufacturing site of its newest area​ rug: Spain​, Singapore, and the United States. All area rugs are to be sold to retail outlets in the United States for $280 per unit. These retail outlets add their own markup when selling to final customers. Fixed costs and variable cost per unit​ (area rug) differ in the three countries

Variable

Sales Price

Annual

Variable

Marketing and

to Retail

Fixed

Manufacturing Cost

Distribution Cost

Country

Outlets

Costs

per Area Rug

per Area Rug

Spain

$280.00

$9,394,000

$70.00

$56.00

Singapore

280.00

5,775,000

65.00

47.00

the United States

280.00

22,050,000

70.00

63.00

Requirement 1

Compute the breakeven point for Area Rugs, Inc. in each country in (a) units sold and (b) revenues

Determine the formulas for the breakeven point in units and the breakeven point in revenues. begin with the breakeven point in units, then the breakeven point in revenues.  

Requirement 2

If Area Rugs, Inc. plans to produce and sell 65,000 rugs in 2014, what is the budgeted operating income for each of the three manufacturing locations? comment on the results

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