The CEO asks for your recommendation. You collect the relevant estimated costs of each method. The manufacturing
Question:
Capitalintensive Laborintensive
Direct Materials $ $
Direct labor $ $
Variable factory overhead $ $
Variable marketing expense $ $
Total variable costs $ $
Traceable fixed factory overhead $ $
Fixed marketing expense $ $
Total fixed costs $ $
Required:
Using Excel, calculate the estimated breakeven point in units for the new product for each method.
Using Excel, calculate the indifference point in units where the operating incomes of the two methods are
equal.
Based on historical data from a similar product, the number of units to be sold is a normally distributed random
variable with a mean of and a standard deviation of units. Using this information and Excels
formula, NORMSDISTz calculate the probability that the level of sales will exceed the indifference point.
Note: z Indifference Point from Part Mean of XStandard Deviation of X