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Alternative Production Procedures and Operating Leverage Assume Paper Mate is planning to introduce a new executive pen that can be manufactured using either a capital

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Alternative Production Procedures and Operating Leverage Assume Paper Mate 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 16.00 Director per unit $5.00 $13.00 Variable manufacturing overhead per unit 52.00 Foxed manufacturing overhead per year 52,160,000.00 $540000.00 $5.00 Paper Mate's market research department has recommended an introductory unit ales price of 531. The incremental selling costs are predicted to be $500,000 per year, plus 2 per unit sold. (a) Determine the annual break-even point in units if Paper Mme uses the 1. Capital intensive manufacturing method X units 2. Labor intensive manufacturing method. units o manufacturing methods (b) Determine the annual unit volume at which Paper Mate is indiferent between the 300.000 units 2. Compute operating leverage for each alternative at a volume of 230,000 units. Round your answers two decimal places. Capital Intensive operating leverage 2.89 X LaborIntensive operating leverage 1.58 X

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