PR 7-44. (Algo) Part 2: Determine the annual unit sales volume... 2. Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. Note: Do not round intermediate calculations. Round your final answer to nearest whole number. Volume units
PR 7-44. (Algo) Part 2: Determine the annual unit sales volume... 2. Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. Note: Do not round intermediate calculations. Round your final answer to nearest whole number. Volume units
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:PR 7-44. (Algo) Part 2: Determine the annual unit sales volume...
2. Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods.
Note: Do not round intermediate calculations. Round your final answer to nearest whole number.
Volume
units
![Required information
PR 7-44 (Algo) 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, Incorporated, 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
Direct material
Direct labor (DLH denotes direct-labor hours).
Variable overhead
Pixed overhead.
System
0.5DLM $24.00
0.5DLH $15.00
$8.70
12.00
7.50
$ 4,260,000
Labor-Intensive Production system
$9.60
PR 7-44 (Algo) Part 2: Determine the annual unit sales volume...
0.8DLH $19.50)
0.8DLB $15.00
*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 $69.00. Selling
expenses are estimated to be $870,000 annually plus $4.20 for each unit sold. (Ignore income taxes.)
15.60
12.00
$ 2,580,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4d4b00a5-a55d-4357-96b4-1a47e0f88e7c%2Fe4885fca-6411-44d3-a16f-f61ee5fe3ffc%2Fx8c6smn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
PR 7-44 (Algo) 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, Incorporated, 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
Direct material
Direct labor (DLH denotes direct-labor hours).
Variable overhead
Pixed overhead.
System
0.5DLM $24.00
0.5DLH $15.00
$8.70
12.00
7.50
$ 4,260,000
Labor-Intensive Production system
$9.60
PR 7-44 (Algo) Part 2: Determine the annual unit sales volume...
0.8DLH $19.50)
0.8DLB $15.00
*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 $69.00. Selling
expenses are estimated to be $870,000 annually plus $4.20 for each unit sold. (Ignore income taxes.)
15.60
12.00
$ 2,580,000
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