Question

. If for competitive reasons, Washburn eventually must move all its production back to Asia, (a) which specific costs might be lowered and (b) what additional fixed and variable costs might it expect to incur

Answer 1

This is a really long question, and most of it is missing. But after reading all the question, Washburn Guitars can actually save a considerable amount of money if they move to China or some other Asian countries.

a) The largest savings will result from lower rent and taxes, and labor expenses (less time required per unit).

b) The costs that might increase are management and quality control costs. Working in different countries will always result in higher administrative costs, and at least at the beginning the company should pay special attention to quality.