Question

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

Answer 1