Zodiac company has decided to introduce a new product which

Reference no: EM13485316

Zodiac Company has decided to introduce a new product, which can be manufactured by either a computer-assisted manufacturing system or a labor-intensive production system. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows:

	Labor-Intensive Production System		Computer-Assisted Manufacturing System
Direct material		$ 9.70		$ 8.80
Direct labor	.8DLH @ $20.00	16.00	.5DLH @ $24.50	12.30
Variable overhead	.8DLH @ $15.50	12.40	.5DLH @ $15.50	7.75
Fixed overhead*		$2,630,000	$	4,310,000

*	These costs are directly traceable to the new product line. They would not be incurred if the new product were not produced.

The company's marketing research department has recommended an introductory unit sales price of $71.00. Selling expenses are estimated to be $880,000 annually plus $4.30 for each unit sold. (Ignore income taxes.)

Calculate Zodiac's estimated break-even point in annual unit sales of the new product if the company uses the (a) labor-intensive production system; (b) computer-assisted manufacturing system. (Do not round intermediate calculations and round your final answer up to nearest whole number.)

	Break-Even Point
Labor-intensive production system	122,727	units
Computer-assisted manufacturing system		units

Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. (Do not round intermediate calculations and round your final answer up to nearest whole number.)

Volume

units

Reference no: EM13485316

Questions Cloud

What are the two definitions of cash and why do corporate : what are the two definitions of cash and why do corporate treasurers often use the second

Joels principal residence is destroyed in a fire in a : joels principal residence is destroyed in a fire in a federally declared disaster area. the insurance compensates joel

What are the three principal forms of business organization : what are the three principal forms of business organization? what are the advantages and disadvantages of

Lance berkman is the controller of saturn a dance club : lance berkman is the controller of saturn a dance club whose year end is december 31. berkman prepares checks for

Zodiac company has decided to introduce a new product which : zodiac company has decided to introduce a new product which can be manufactured by either a computer-assisted

What are the three most important determinants of a firms : what are the three most important determinants of a firms return on stockholders

Cholarpak company produced and sold 76000 backpacks during : cholarpak company produced and sold 76000 backpacks during the year just ended at an average price of 36.00 per unit.

What are the primary sources of information about the : what are the primary sources of information about the creditworthiness of credit

The silk corporation has outstanding 200000 of 8 percent : the silk corporation has outstanding 200000 of 8 percent bonds callable at 104. on december 1. immediately after the

User Account

All Pages