Kelly Kneppy owns a company that manufactures and sells camping equipment and outdoor

gear. Kellys latest creation is the Bear-B-Gone, a tent constructed of Kevlar and reinforced steel

mesh that could theoretically protect campers (who hadnt followed appropriate food storage

guidelines) from bear attacks. Kelly believes the Bear-B-Gone offers many of the same desirable

features as other tents on the market, and that this extreme safety feature will make it one of the

best-selling tents in short order.

Kelly can make the Bear-B-Gone with one of two available technologies. The first is a labor-

intensive process, that if chosen will require $600,000 per year in fixed overhead costs, and the

following in variable costs of production per unit: direct materials of $75, direct labor of $75,

and overhead of $20. The second technology is a more automated (machine-dependent) process,

that if chosen will require $2,000,000 per year in fixed overhead costs, and the following in

variable costs of production: direct materials of $75, direct labor of $5, and overhead of $60.

Kelly believes she can sell the tent for $200.

6) What other factors might affect Kellys decision to focus on capital- vs. labor-intensive

processes? To get you started, consider things from earlier in this class and outside of a

strictly managerial accounting realm, such as taxes (or tax credits for certain business

operations), product quality, and public perception (using employees vs. automation). To

strengthen your response, you might wish to refer to a source or two from business or

popular press that illustrates how the factor(s) youre discussing affected a real

organization in a positive or negative manner.