Problem 7-44 Break-Even Analysis; Operating Leverage; New Manufacturing Environment (LO 7-1, 7-8, 7- 10) [The following information applies to the questions displayed below.] Celestial Products, Inc., 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: Direct material Direct labor (DLH denotes direct-labor hours) Variable overhead Fixed overhead* roblem 7-44 Part 2 Computer-Assisted Manufacturing System $ olume 0.5DLH @ $28.00 0.5DLH @ $19.00 units 9.50 14.00 9.50 $4,660,000 Labor-Intensive *These costs are directly traceable to the new product line. They would not be incurred if the new product were not produced. Production System $ The company's marketing research department has recommended an introductory unit sales price of $85.00. Selling expenses are estimated to be $950,000 annually plus $5.00 for each unit sold. (Ignore income taxes.) Assessment Tool iFrame 0.8DLH @ $23.50 0.8DLH @ $19.00 10.40 18.80 15.20 $2,980,000 Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. (Do not und intermediate calculations. Round your final answer to the nearest whole number.)
Problem 7-44 Break-Even Analysis; Operating Leverage; New Manufacturing Environment (LO 7-1, 7-8, 7- 10) [The following information applies to the questions displayed below.] Celestial Products, Inc., 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: Direct material Direct labor (DLH denotes direct-labor hours) Variable overhead Fixed overhead* roblem 7-44 Part 2 Computer-Assisted Manufacturing System $ olume 0.5DLH @ $28.00 0.5DLH @ $19.00 units 9.50 14.00 9.50 $4,660,000 Labor-Intensive *These costs are directly traceable to the new product line. They would not be incurred if the new product were not produced. Production System $ The company's marketing research department has recommended an introductory unit sales price of $85.00. Selling expenses are estimated to be $950,000 annually plus $5.00 for each unit sold. (Ignore income taxes.) Assessment Tool iFrame 0.8DLH @ $23.50 0.8DLH @ $19.00 10.40 18.80 15.20 $2,980,000 Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. (Do not und intermediate calculations. Round your final answer to the nearest whole number.)
Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
Related questions
Question
![Problem 7-44 Break-Even Analysis; Operating Leverage; New Manufacturing Environment (LO 7-1, 7-8, 7-
10)
[The following information applies to the questions displayed below.]
Celestial Products, Inc., 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:
Direct material
Direct labor (DLH denotes direct-labor hours)
Variable overhead
Fixed overhead*
Problem 7-44 Part 2
Computer-Assisted
Manufacturing System
$
Volume
0.5DLH @ $28.00
0.5DLH @ $19.00
units
9.50
14.00
9.50
$4,660,000
Labor-Intensive
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
Production System
$
The company's marketing research department has recommended an introductory unit sales price of $85.00. Selling
expenses are estimated to be $950,000 annually plus $5.00 for each unit sold. (Ignore income taxes.)
Assessment Tool iFrame
0.8DLH @ $23.50
0.8DLH @ $19.00
10.40
18.80
15.20
$2,980,000
. Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. (Do not
ound intermediate calculations. Round your final answer to the nearest whole number.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F21d3c2f2-67a5-4e6a-bf2b-5d5fa64c75d1%2Fcf6fbc84-caed-488a-93e0-09200ea94674%2Fdjk68a_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 7-44 Break-Even Analysis; Operating Leverage; New Manufacturing Environment (LO 7-1, 7-8, 7-
10)
[The following information applies to the questions displayed below.]
Celestial Products, Inc., 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:
Direct material
Direct labor (DLH denotes direct-labor hours)
Variable overhead
Fixed overhead*
Problem 7-44 Part 2
Computer-Assisted
Manufacturing System
$
Volume
0.5DLH @ $28.00
0.5DLH @ $19.00
units
9.50
14.00
9.50
$4,660,000
Labor-Intensive
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
Production System
$
The company's marketing research department has recommended an introductory unit sales price of $85.00. Selling
expenses are estimated to be $950,000 annually plus $5.00 for each unit sold. (Ignore income taxes.)
Assessment Tool iFrame
0.8DLH @ $23.50
0.8DLH @ $19.00
10.40
18.80
15.20
$2,980,000
. Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. (Do not
ound intermediate calculations. Round your final answer to the nearest whole number.)
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