[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* Computer-Assisted Manufacturing System $ 0.5DLH @ $25.50 0.5DLH @ $16.50 9.00 12.75 8.25 $4,410,000 Labor-Intensive Production System $ 0.8DLH @ $21.00 0.8DLH @ $16.50 9.90 16.80 13.20 $2,730,000 *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 $75.00. Selling expenses are estimated to be $900,000 annually plus $4.50 for each unit sold. (Ignore income taxes.)
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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[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*
Computer-Assisted
Manufacturing System
$
Volume
0.5DLH @ $25.50
0.5DLH @ $16.50
9.00
12.75
8.25
$4,410,000
units
Labor-Intensive
Production System
$
0.8DLH @ $21.00
0.8DLH @ $16.50
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
9.90
16.80
13.20
$2,730,000
The company's marketing research department has recommended an introductory unit sales price of $75.00. Selling
expenses are estimated to be $900,000 annually plus $4.50 for each unit sold. (Ignore income taxes.)
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.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0a289501-b503-4629-8de4-921f56240ac4%2F29f1e013-7d4b-4ad1-bdb7-8ab2e588c32b%2F2lfhwho_processed.jpeg&w=3840&q=75)
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