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Determine the annual unit sales volume

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Reference no: EM133014527

Question - Cullumber Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows.

Capital-Intensive

Direct materials $6.40 per unit

Direct labor $7.68 per unit

Variable overhead $3.84 per unit

Fixed manufacturing costs $3,229,760

Labor-Intensive

Direct materials $6.90per unit

Direct labor $9.68per unit

Variable overhead $5.34per unit

Fixed manufacturing costs $2,239,328

Cullumber' market research department has recommended an introductory unit sales price of $40.96. The incremental selling expenses are estimated to be $710,592 annually plus $2.56 for each unit sold, regardless of manufacturing method

Calculate the estimated break-even point in annual unit sales of the new product if Cullumber Company uses the: Capital-intensive manufacturing method.2.Labor-intensive manufacturing method.

Determine the annual unit sales volume at which Cullumber Company would be indifferent between the two manufacturing methods.

Reference no: EM133014527

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