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* blem 7-44 Part 1 Computer-Assisted Manufacturing System $ 0.5DLH @ $19.50 0.5DLH @ $10.50 puter-assisted manufacturing system or-intensive production system 7.80 9.75 5.25 $3,810,000 Break-Even Point units units Labor-Intensive Production System $ *These costs are directly traceable to the new product line. They would not be incurred if the new product were not produced. 0.8DLH @ $15.00 0.8DLH @ $10.50 The company's marketing research department has recommended an introductory unit sales price of $51.00. Selling expenses are estimated to be $780,000 annually plus $3.30 for each unit sold. (Ignore income taxes.) 8.70 12.00 8.40 $2,130,000 uired: alculate the estimated break-even point in annual unit sales of the new product if the company uses the (a) computer-assisted ufacturing system; (b) labor-intensive production system. (Do not round intermediate calculations. Round your final answers to 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* blem 7-44 Part 1 Computer-Assisted Manufacturing System $ 0.5DLH @ $19.50 0.5DLH @ $10.50 puter-assisted manufacturing system or-intensive production system 7.80 9.75 5.25 $3,810,000 Break-Even Point units units Labor-Intensive Production System $ *These costs are directly traceable to the new product line. They would not be incurred if the new product were not produced. 0.8DLH @ $15.00 0.8DLH @ $10.50 The company's marketing research department has recommended an introductory unit sales price of $51.00. Selling expenses are estimated to be $780,000 annually plus $3.30 for each unit sold. (Ignore income taxes.) 8.70 12.00 8.40 $2,130,000 uired: alculate the estimated break-even point in annual unit sales of the new product if the company uses the (a) computer-assisted ufacturing system; (b) labor-intensive production system. (Do not round intermediate calculations. Round your final answers to nearest whole number.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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 1
Computer-Assisted
Manufacturing System
Computer-assisted manufacturing system
Labor-intensive production system
0.5DLH @ $19.50
0.5DLH @ $10.50
Break-Even Point
7.80
9.75
5.25
$3,810,000
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
units
units
Labor-Intensive
Production System
The company's marketing research department has recommended an introductory unit sales price of $51.00. Selling
expenses are estimated to be $780,000 annually plus $3.30 for each unit sold. (Ignore income taxes.)
0.8DLH @ $15.00
0.8DLH @ $10.50
8.70
12.00
8.40
$2,130,000
Required:
1. Calculate the estimated break-even point in annual unit sales of the new product if the company uses the (a) computer-assisted
manufacturing system; (b) labor-intensive production system. (Do not round intermediate calculations. Round your final answers to
the nearest whole number.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc02130d8-e957-469e-a524-59bb543018e6%2F3fd09f89-4689-4fbd-88a6-c404236d0da5%2Fcjdbwnh_processed.jpeg&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 1
Computer-Assisted
Manufacturing System
Computer-assisted manufacturing system
Labor-intensive production system
0.5DLH @ $19.50
0.5DLH @ $10.50
Break-Even Point
7.80
9.75
5.25
$3,810,000
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
units
units
Labor-Intensive
Production System
The company's marketing research department has recommended an introductory unit sales price of $51.00. Selling
expenses are estimated to be $780,000 annually plus $3.30 for each unit sold. (Ignore income taxes.)
0.8DLH @ $15.00
0.8DLH @ $10.50
8.70
12.00
8.40
$2,130,000
Required:
1. Calculate the estimated break-even point in annual unit sales of the new product if the company uses the (a) computer-assisted
manufacturing system; (b) labor-intensive production system. (Do not round intermediate calculations. Round your final answers to
the nearest whole number.)
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