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 $5.00 $6.00 Direct labor per unit $5.00 $13.00 Variable manufacturing overhead per unit $5.00 $2.00 Fixed manufacturing overhead per year $2,580,000.00 $780,000.00 2. Compute operating leverage for each alternative at a volume of 260,000 units. Round your answers two decimal places. Capital-Intensive operating leverage 0 Labor-Intensive operating leverage 0 3. Which alternative has the higher operating leverage? Why? OThe capital intensive method has a higher operating leverage because of the greater use of fixed costs. OThe labor intensive method has a higher operating leverage because of higher variable conversion costs. OThe labor intensive method has a higher operating leverage because of lower variable manufacturing overhead. OThe capital intensive method has a higher operating leverage because of the higher variable manufacturing overhead.