Expand Your Critical Thinking Decision-MakingAcross the Organization CTZZJ Creative Ideas Company has decided to introduce a new product. The new product can be manufactured by either a capitalintensive method or a laborintensive method. The manufacturing method will not affect the qualin of the product. The estimated manufacturing costs by the two methods are as follows. Capital- Lahor- Intensive Intensive Direct materials 55 per unit $5.50 per unit Direct labor $6 per unit $3.00 per unit Variable overhead $3 per unit $4.50 per unit Fixed manufacturing costs $2,524,EK]D 3515501110 Creative Ideas' market research department has reeonunended an introductory unit saJes price of $32. The incremental selling expenses are estimated to be $502,000 annually plus $2 for each unit sold, regardless of manufacturing method. 12-41 CHAPTER 22 Cost-Volume-Prot Instructions With the class divided into groups, answer the following. :1. Calculate the estimated break-even point in annual unit sales of the new product if Creative Ideas Company uses the: 1. Capitalintmsive manufacturing method. 2. Labor-intensive manufacturing method. I]. Determine the annual unit sales volume at which Creative Ideas Company would be indi'erent between the two manufacturing methods. c. Explain the circumstance under which Creative Ideas should employ each of the two manufacturing methods. {EMA adapted]