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Wildhorse 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
Wildhorse 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 Labor-Intensive Direct materials $6.10 per unit $6.60 per unit Direct labor $7.32 per unit $9.32 per unit Variable overhead $3.66 per unit $5.16 per unit Fixed manufacturing costs $3,078,320 $2,112,464 Wildhorse' market research department has recommended an introductory unit sales price of $39.04. The incremental selling expenses are estimated to be $665,616 annually plus $2.44 for each unit sold, regardless of manufacturing method. Answer the following Calculate the estimated break-even point in annual unit sales of the new product if Wildhorse Company uses the: 1. Capital-intensive manufacturing method. Labor-intensive manufacturing method. 2. Capital-Intensive Labor-Intensive Break-even point in units Save for Later Attempts: 0 of 1 used
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