Canton Corporation is considering introducing a new product. The product can be manufactured using either a capitalintensive or labor-intensive method. The manufacturing method will not affect the quality or sales ofthe product. The estimated manufacturing costs ofthe two methods are as follows: Capital-intensive Laborintensive "v'ariahle manuf. cost 5 [4.430 per unit $11611] per unit Fixed manuf. cost $2,44 per year $1,32 per year The company's market research department has recommended an introductory selling price of 5313 per unit for the new product. The annual fixed selling and administrative expenses of the new product are $5,{l. The variable selling and administrative expenses are $2 per unit regardless of how the new product is manufactured. Required: a. Calculate the break-even point in units if Canton Corporation uses the: {i} capital-intensive manufacturing method. (2 marks] {ii} laborintensive manufacturing method. {2 marks] I]. Detem'nine the sales volume (in units of product] at which the net income is the same for the two manufacturing methods. [2 marks] c. Assuming expected sales of units1 what is the degree of operating leverage if the company uses the: {i} capital-intensive manufacturing method. (2 marks] {ii} laborintensive manufacturing method. {2 marks] d. Based on your answers to part 3, predict the net income under each of the two production methods if sales increase to HELEN!) units {that is, an increase of LINE: from the originally expected level}. {2 marks) e. What is your recommendation to the management concerning which manufacturing method should he used? Explain. {2 marks}