Carla Vista Company has decided to introduce a new product that can be manufactured by either a capital-intensive method or a labour-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs under the two methods are as follows: Capital-Intensive Labour-Intensive Direct materials $5.50 per unit $10.75 per unit Direct labour $4.00 per unit $9.00 per unit Variable overhead $3.50 per unit $7.25 per unit Fixed manufacturing costs $2,423,040 $1,488,000 Carla Vista's market research department has recommended an introductory unit sales price of $32. The incremental selling expenses are estimated to be $481,920 annually, plus $2 for each unit sold, regardless of the manufacturing method. (a) (b) Your Answer Correct Answer (Used) Your answer is partially correct. Calculate the estimated break-even point in annual unit sales of the new product if Carla Vista Company uses (1) the capital- intensive manufacturing method, or (2) the labour-intensive manufacturing method. Break-even point (1) (2) Capital-intensive manufacturing method Labour-intensive manufacturing method eTextbook and Media Solution 170880 units 654640 units Determine the annual unit sales volume at which there would be no difference between methods. Annual sales volume units Assistance Used Attempts: 3 of 3 used
Carla Vista Company has decided to introduce a new product that can be manufactured by either a capital-intensive method or a labour-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs under the two methods are as follows: Capital-Intensive Labour-Intensive Direct materials $5.50 per unit $10.75 per unit Direct labour $4.00 per unit $9.00 per unit Variable overhead $3.50 per unit $7.25 per unit Fixed manufacturing costs $2,423,040 $1,488,000 Carla Vista's market research department has recommended an introductory unit sales price of $32. The incremental selling expenses are estimated to be $481,920 annually, plus $2 for each unit sold, regardless of the manufacturing method. (a) (b) Your Answer Correct Answer (Used) Your answer is partially correct. Calculate the estimated break-even point in annual unit sales of the new product if Carla Vista Company uses (1) the capital- intensive manufacturing method, or (2) the labour-intensive manufacturing method. Break-even point (1) (2) Capital-intensive manufacturing method Labour-intensive manufacturing method eTextbook and Media Solution 170880 units 654640 units Determine the annual unit sales volume at which there would be no difference between methods. Annual sales volume units Assistance Used Attempts: 3 of 3 used
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Carla Vista Company has decided to introduce a new product that can be manufactured by either a capital-intensive method or a
labour-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs
under the two methods are as follows:
Capital-Intensive
Labour-Intensive
Direct materials
$5.50 per unit
$10.75 per unit
Direct labour
$4.00 per unit
$9.00 per unit
Variable overhead
$3.50 per unit
Fixed manufacturing costs
$2,423,040
$7.25 per unit
$1,488,000
Carla Vista's market research department has recommended an introductory unit sales price of $32. The incremental selling
expenses are estimated to be $481,920 annually, plus $2 for each unit sold, regardless of the manufacturing method.
(a)
Your Answer
Correct Answer (Used)
Your answer is partially correct.
Calculate the estimated break-even point in annual unit sales of the new product if Carla Vista Company uses (1) the capital-
intensive manufacturing method, or (2) the labour-intensive manufacturing method.
(b)
Break-even point
(1)
(2)
Capital-intensive manufacturing method Labour-intensive manufacturing method
eTextbook and Media
Solution
170880 units
654640
units
Determine the annual unit sales volume at which there would be no difference between methods.
Annual sales volume
units
Assistance Used
Attempts: 3 of 3 used
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education