$10.00 $2.00 5. Alternative Production Procedures and Operating Leverage Assume Sharpie, a brand of Newell Brands, is planning to introduce a new executive pen that can be manufactured using either a capital-intensive method or a labor-intensive method. The predicted manufacturing costs for each method are as follows: Capital Intensive Labor Intensive Direct materials per unit $12.00 Direct labor per unit 54.00 $ 12.00 Variable manufacturing overhead per unit 55.00 Fixed manufacturing overhead per year $1,800,000 $500,000 Sharpie's market research department has recommended an introductory unit sales price of $120. The incremental selling costs are predicted to be $250,000 per year, plus $6 per unit sold. (a) Determine the annual break-even point in units if Sharpie uses the 1) Capital-intensive manufacturing method, and 2) Labor-intensive manufacturing method. Show your calculations and round your answers to the nearest whole number. 1) Capital-intensive manufacturing method. 2) Labor-intensive manufacturing method. (b) Determine the annual unit volume at which Sharpie is indifferent between the two manufacturing methods. Show your calculations and round your answer to the nearest whole number. (c) Compute operating leverage for each alternative at a volume of 100,000 units. Show your calculations and round your answers two decimal places. 1) Capital-Intensive operating leverage 2) Labor-Intensive operating leverage