Maurice Tutor

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About Maurice Tutor

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Expertise:
Algebra,Applied Sciences See all
Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
Last Sign in: 402 Weeks Ago, 5 Days Ago
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Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

Experience

  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 17 Aug 2017 My Price 10.00

Creative Ideas Company

BYP5-2 Creative Ideas 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 manufactur- ing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows.

 

 

Capital-

Intensive

 

Labor-

Intensive

Direct materials Direct labor Variable overhead

Fixed manufacturing costs

$5 per unit

$6 per unit

$3 per unit

$2,524,000

 

$5.50 per unit

$8.00 per unit

$4.50 per unit

$1,550,000

Creative Ideas’ market research department has recommended an introductory unit sales price of $32. The incremental selling expenses are estimated to be $502,000 annually plus $2 for each unit sold, regardless of manufacturing method.

Instructions

With the class divided into groups, answer the following.

(a)  Calculate the estimated break-even point in annual unit sales of the new product if Creative Ideas Company uses the:

(1)   Capital-intensive manufacturing method.

(2)   Labor-intensive manufacturing method.

(b)  Determine the annual unit sales volume at which Creative Ideas Company would be indifferent between the two manufacturing methods.

(c)   Explain the circumstance under which Creative Ideas should employ each of the two manufac- turing methods.

Answers

Maurice Tutor
(5)
Status NEW Posted 17 Aug 2017 07:08 PM My Price 10.00

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