Description of this paper

Help with Accounting Exercise




Martinez Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows;Direct Materials;Direct Labor;Variable Overhead;Fixed manufacturing costs;Capital Intensive;$5 per unit;$6 per unit;$3 per unit;$2,508,000;Labor Intensive;$5.50 per unit;$8.00 per unit;$4.50 per unit;$1,538,000;Maritnez's market research department has recommended an introductory unit sales price of $30. The incremental selling expenses are estimated to be $502,000 annually plus $#2 for each unit sold, regardless of manufacturing method.;Instructions;a. Calculate the estimated break-even point in annual unit sales of the new product if Martinez Company use the;(1) Capital-intensive manufacturing method;(2) Labor-intensive manufacturing method;b. Determine the annual unit sales volume at which Martenez Company would be indifferent between the two manufacturing methods.;c. Explain the circumstances under which Martinez should employ each of the two manufacturing methods.;After you show the calculations for each one please provide an explanation on what the answer means and how you got the answer so that I can thoroughly be able to explain it in my paper, thanks!!!!


Paper#80956 | Written in 18-Jul-2015

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