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Pharoah Company has decided to introduce a new product. The new product can be manufactured by either a capital-Intensive method or a labor-intensive method. The
Pharoah Company has decided to introduce a new product. The new product can be manufactured by either a capital-Intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows Capital Intensive $450 per unit $5.40 Labor-Intensive $5.00 per unit $7.40 per unit $ 420 per unit Direct materials Direct labor Variable overhead Fored manufacturing costs per unit $ 270 per unit $2270,640 $ 1.416,400 h Pharoah market research department has recommended an introductory unit sales price of $ 28.80. The incremental selling expenses are estimated to be 5 445,200 annually plus $ 1.80 for each unit sold, regardless of manufacturing method. Answer the following (a) Calculate the estimated break-even point in annual unit sales of the new product if Pharoah Company uses the 1 Capital Intensive manufacturing method Labor-intensive manufacturing method 2
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