# WileyPLUS Assignment: Week 5 Assignment - Paper

Jun 18th, 2014
Anonymous
Category:
Accounting
Price: \$5 USD

Question description

BYP18-1 Martinez 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- Labor-

Intensive Intensive

Direct materials \$5 per unit \$5.50 per unit

Direct labor \$6 per unit \$8.00 per unit

Variable overhead \$3 per unit \$4.50 per unit

Fixed manufacturing costs \$2,508,000 \$1,538,000

Martinez’s market research department has recommended an introductory unit sales price of \$30. The incremental selling expenses are estimated to be \$502,000 annually plus \$2 for each unit sold, regardless of manufacturing method.

Instructions

Show all supporting calculations for part a

With the class divided into groups, answer the following.

(a)Calculate the estimated break-even point in annual unit sales of the new product if Martinez

Company uses the:

(1) Capital-intensive manufacturing method.

(2) Labor-intensive manufacturing method.

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