Cullumber Company has decided to introduce a new product that can be manufactured by either a capital-intensive method or a labour-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs under the two methods are as follows:

		Capital-Intensive		Labour-Intensive
Direct materials		$5.50 per unit		$10.75 per unit
Direct labour		$4.00 per unit		$9.00 per unit
Variable overhead		$3.50 per unit		$7.25 per unit
Fixed manufacturing costs		$2,675,440		$1,643,000

Cullumbers market research department has recommended an introductory unit sales price of $32. The incremental selling expenses are estimated to be $532,120 annually, plus $2 for each unit sold, regardless of the manufacturing method.

(a)

Calculate the estimated break-even point in annual unit sales of the new product if Cullumber Company uses (1) the capital-intensive manufacturing method, or (2) the labour-intensive manufacturing method.

		(1) Capital-intensive manufacturing method			(2) Labour-intensive manufacturing method
Break-even point		enter a number of units	units		enter a number of units	units