Farmers Union Ltd has decided to introduce a new product, which can be manufactured by either a labour-intensive production system or a machine-assisted manufacturing system. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs relating to the two methods are as follows:

	Labour intensive	Machine assisted
Selling price per unit	$130	$130
Direct material per unit	$22	$22
Direct labour per unit	$24	$10
Machine costs per unit	$4	$10
Fixed overhead	$ 3 000 000	$ 3 696 000

Required:

I. Complete the table below for each method (4 marks)

	Labour intensive	Machine assisted
Contribution margin
Breakeven point in sales units

II. Calculate the annual sales volume at which Farmers Union Ltd would be indifferent to which of the two manufacturing methods is chosen (2 marks)

III. If Farmers Union Ltd decided to adopt the labour intensive method. How many units of the new product would need to be sold to make a profit of $500 000? (2 marks)