Sonik manufactures audio speakers for tablet computers. The following data relat

Question

Sonik manufactures audio speakers for tablet computers. The following data relate to the period just ended, when the company produced and sold 45,500 speaker sets: Sales Variable costs Fixed costs $ 8,071,000 2.023,000 5,480,400 The company's management is considering relocating its manufacturing operations from Darwin to China to reduce costs. If this happens, variable costs are expected to average $48.80 per set and fixed costs of $4,767,200 are anticipated. (Ignore income taxes.) Required: 1. Calculate the company's current profit and determine the level of sales (in dollars) needed to double that tigure, assuming that manufacturing operations remain in Darwin. 2. Determine the break-even point if operations are shifted to China. 3. Assume that management wants to achieve the break-even point calculated for China in requirement 2. However, it has now decided to keep operations in Darwin a. If unit variable costs remain constant, what level of fixed costs is needed to achieve the desired break-even point? b. If fixed costs remain constant, what level of unit variable costs is needed to achieve that break-even point? 4. Determine the impact (increase, decrease, or no effect) of the following operating changes.

Explanation / Answer

1..Darwin 45500 sets Per set Sales 8071000 177.38 Less: Variable costs 2023000 44.46 Contribution 6048000 132.92 Less: Fixed costs 5480400 Profit 567600 Profit doubled 567600*2= 1135200 Add: Fixed costs 5480400 Contribution reqd. 6615600 $ Contribution per unit from above 132.92 So.no.of sets=6615600/132.92= 49771 So, $ sales=49771*177.38= 8828380 2..Operations shifted to China BEP(in sets)=Fixed costs/(Selling Price-Variable cost) BEP(in sets)=4767200/(177.38-48.80)= 37076 sets 3.. a.. 37076= Fixed costs/(177.38-44.46) Solving the above, Fixed costs= $ 4928140 b..37076=5480400/(177.38-V.C/unit) Solving the above, Variable cost/unit= $ 29.56

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.