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: Direct material Direct labor (DLH denotes direct-labor hours) Variable overhead Fixed overhead* Computer-Assisted Manufacturing System $ 7.60 9.25 4.75 $ 3,710,000 0.5DLH@ $18.50 0.5DLH@ $9.50 lume *These costs are directly traceable to the new product line. They would not be incurred if the new product were not produced. 7-44 (Algo) Part 2: Determine the annual unit sales volume... Labor-Intensive Production System $8.50 The company's marketing research department has recommended an introductory unit sales price of $47.00. Selling expenses are estimated to be $760,000 annually plus $3.10 for each unit sold. (Ignore income taxes.) units 0.8DLH @ $14.00 0.8DLH @ $9.50 Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. te: Do not round intermediate calculations. Round your final answer to nearest whole number. 11.20 7.60 $2,030,000
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: Direct material Direct labor (DLH denotes direct-labor hours) Variable overhead Fixed overhead* Computer-Assisted Manufacturing System $ 7.60 9.25 4.75 $ 3,710,000 0.5DLH@ $18.50 0.5DLH@ $9.50 lume *These costs are directly traceable to the new product line. They would not be incurred if the new product were not produced. 7-44 (Algo) Part 2: Determine the annual unit sales volume... Labor-Intensive Production System $8.50 The company's marketing research department has recommended an introductory unit sales price of $47.00. Selling expenses are estimated to be $760,000 annually plus $3.10 for each unit sold. (Ignore income taxes.) units 0.8DLH @ $14.00 0.8DLH @ $9.50 Determine the annual unit sales volume at which the firm would be indifferent between the two manufacturing methods. te: Do not round intermediate calculations. Round your final answer to nearest whole number. 11.20 7.60 $2,030,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:
Direct material
Direct labor (DLH denotes direct-labor hours)
Variable overhead
Fixed overhead*
Computer-Assisted Manufacturing System
$ 7.60
9.25
4.75
$ 3,710,000
Volume
0.5DLH @ $18.50
0.5DLH @ $9.50
Labor-Intensive Production System
$8.50
11.20
7.60
$ 2,030,000
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
units
0.8DLH @ $14.00
0.8DLH @ $9.50
The company's marketing research department has recommended an introductory unit sales price of $47.00. Selling
expenses are estimated to be $760,000 annually plus $3.10 for each unit sold. (Ignore income taxes.)
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F95a2e371-d4dc-4062-8b7a-9c784a2913e7%2Fb4dccd36-681d-43f3-9d9a-8cb78504a4a9%2Fsw4l75n_processed.png&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:
Direct material
Direct labor (DLH denotes direct-labor hours)
Variable overhead
Fixed overhead*
Computer-Assisted Manufacturing System
$ 7.60
9.25
4.75
$ 3,710,000
Volume
0.5DLH @ $18.50
0.5DLH @ $9.50
Labor-Intensive Production System
$8.50
11.20
7.60
$ 2,030,000
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
units
0.8DLH @ $14.00
0.8DLH @ $9.50
The company's marketing research department has recommended an introductory unit sales price of $47.00. Selling
expenses are estimated to be $760,000 annually plus $3.10 for each unit sold. (Ignore income taxes.)
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.
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