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Sunland Company has decided to introduce a new product that can be manufactured by either a capital-intensive method or a labour- intensive method. The
Sunland 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: Direct materials Direct labour Variable overhead Fixed manufacturing costs Capital-Intensive Labour-Intensive $5.50 per unit $10.75 per unit $4.00 per unit $9.00 per unit $3.50 per unit $7.25 per unit $2,927,840 $1,798,000 Sunland's market research department has recommended an introductory unit sales price of $32. The incremental selling expenses are estimated to be $582,320 annually, plus $2 for each unit sold, regardless of the manufacturing method. (b) Determine the annual unit sales volume at which there would be no difference between methods. Annual sales volume units
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