Celestial Products, Ic., 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: Computer-Assisted Manufacturing System Labor-Intensive Production System Direct material Direct labor (DLH denotes direct-labor hours) Variable overhead Fixed overhead $ 10.50 0.8DLH @ $16.50 0.8DLH @ $12.00 9.00 13.20 9.60 $2, 280,000 8.10 0.5DLH @ $21.00 0.5DLH @ $12.00 6.00 $3,960,000 *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 $57.00. Selling expenses are estimated to be $810,000 annually plus $3.60 for each unit sold. (Ignore income taxes.) Problem 7-44 Part 2 2. Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. (Do not round intermediate calculations. Round your final answer to the nearest whole number.)
Celestial Products, Ic., 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: Computer-Assisted Manufacturing System Labor-Intensive Production System Direct material Direct labor (DLH denotes direct-labor hours) Variable overhead Fixed overhead $ 10.50 0.8DLH @ $16.50 0.8DLH @ $12.00 9.00 13.20 9.60 $2, 280,000 8.10 0.5DLH @ $21.00 0.5DLH @ $12.00 6.00 $3,960,000 *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 $57.00. Selling expenses are estimated to be $810,000 annually plus $3.60 for each unit sold. (Ignore income taxes.) Problem 7-44 Part 2 2. Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. (Do not round intermediate calculations. Round your final answer to the nearest whole number.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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![Required information
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:
Computer-Assisted
Manufacturing System
8.10
Labor-Intensive
Production System
$
Direct material
Direct labor (DLH denotes direct-labor hours)
Variable overhead
Fixed overhead*
9.00
13.20
9.60
$2,280,000
2$
0.5DLH @ $21.00
0.5DLH @ $12.00
10.50 0.8DLH @ $16.50
6.00 0.8DLH @ $12.00
$3,960,000
*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 $57.00. Selling
expenses are estimated to be $810,000 annually plus $3.60 for each unit sold. (lgnore income taxes.)
Problem 7-44 Part 2
2. Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. (Do not
round intermediate calculations. Round your final answer to the nearest whole number.)
Volume
units
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Transcribed Image Text:Required information
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:
Computer-Assisted
Manufacturing System
8.10
Labor-Intensive
Production System
$
Direct material
Direct labor (DLH denotes direct-labor hours)
Variable overhead
Fixed overhead*
9.00
13.20
9.60
$2,280,000
2$
0.5DLH @ $21.00
0.5DLH @ $12.00
10.50 0.8DLH @ $16.50
6.00 0.8DLH @ $12.00
$3,960,000
*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 $57.00. Selling
expenses are estimated to be $810,000 annually plus $3.60 for each unit sold. (lgnore income taxes.)
Problem 7-44 Part 2
2. Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. (Do not
round intermediate calculations. Round your final answer to the nearest whole number.)
Volume
units
< Prev
of 4 E
Next>
4
MacBook Pro
%23
24
&
4
6.
8.
E
R
Y
U
J
K
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