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		$ 9.70		$ 8.80
Direct labor	.8DLH @ $20.00	16.00	.5DLH @ $24.50	12.30
Variable overhead	.8DLH @ $15.50	12.40	.5DLH @ $15.50	7.75
Fixed overhead*		$2,630,000	$	4,310,000

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

The company