Zodiac Company has decided to introduce a new product, which can be manufactured by either a computer-assisted manufacturing system or a labor-intensive production system. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows:

	Labor-Intensive Production System		Computer-Assisted Manufacturing System
Direct material		$ 9.30		$ 8.40
Direct labor	.8DLH @ $18.00	14.40	.5DLH @ $22.50	11.25
Variable overhead	.8DLH @ $13.50	10.80	.5DLH @ $13.50	6.75
Fixed overhead*		$2,430,000	$	4,110,000

*	These costs are directly traceable to the new product line. They would not be incurred if the new product were not produced.

The company