1 Question 3 8 points 2 Alkamost Company has decided to introduce a new product. The new product can be manufactured 3 by either a capital-intensive method or a labor intensive method. The manufacturing method will not 4 affect the quality of the product. The estimated manufacturing costs by two methods are as follows Capital Intensive Labor Intensive Direct Materials $11 per unit $11.00 per unit 7 Direct Labor $13 per unit $16.00 per unit 8 Variable Overhead $6 per unit $7.15 per unit 9 Fixed Manuf. OH $2,250,000 $1,350,000 6 12 Alkamost Company's market research department has recommended an introductory unit sales price $72.70 13 The incremental selling expenses are estimated to t $225,000 annually plu 2.20 for each units sold, 14 regardless of manufacturing method Instructions: 16 1 Calculate the estimated break-even point in annual unit sales for the new product if the company uses 17 a) Capital Intensive manufacturing method 18 b) Labor-intensive manufacturing method 19 2 Compute contribution margin ratio and estimated break-even point in sales dollars if the company uses 20 a) Capital Intensive manufacturing method 21 b) Labor-intensive manufacturing method 22 3 What is the degree of operating leverage (general term) and how it is affected by the cost structure? 1. Your name and ID Question 1 Question 2 Question 3