Reference no: EM132405230

Question

Bigil Electronics in USA manufactures RAM'S for desktop computers. The following data relate to the period just ended when the company produced and sold 44,000 RAM'S:

Sales:- $ 3,696,000 Variable costs :- 924,000 Fixed costs :- 2,310,000

Management plans to relocate laboratory facilities to Mexico to reduce costs. Variable costs are expected to average $20.00 per set; annual fixed costs are anticipated to be $1,992,000. (In the following requirements, ignore income taxes.)

Required:

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.

Determine the break-even point in RAM'S if operations are shifted to Mexico.

Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United States.

If variable costs remain constant, by how much must fixed costs change?

If fixed costs remain constant, by how much must unit variable cost change?

Determine the impact (increase, decrease, or no effect) of the following operating changes.