Celestial Products, Inc., 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:

Computer$-$Assisted

Manufacturing System

Labor$-$Intensive

Production System

Direct material $ $9\mathrm{.}10$ $ $10\mathrm{.}00$

Direct labor $($DLH denotes direct$-$labor hours$)0\mathrm{.}5$DLH @ $$26\mathrm{.}0013\mathrm{.}000\mathrm{.}8$DLH @ $$21\mathrm{.}5017\mathrm{.}20$

Variable overhead $0\mathrm{.}5$DLH @ $$17\mathrm{.}008\mathrm{.}500\mathrm{.}8$DLH @ $$17\mathrm{.}0013\mathrm{.}60$

Fixed overhead$*$ $$4,460,000$ $$2,780,000$

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

The company$$s marketing research department has recommended an introductory unit sales price of $$77\mathrm{.}00.$ Selling expenses are

estimated to be $$910,000$ annually plus $$4\mathrm{.}60$ for each unit sold. $($Ignore income taxes.$)$

Required:

$1.$ Calculate the estimated break$-$even point in annual unit sales of the new product if the company uses the $($a$)$ computer$-$assisted

manufacturing system; $($b$)$ labor$-$intensive production system. $($Do not round intermediate calculations. Round your final answers

to the nearest whole number.$)$

Answer rating: 100% (QA)

To calculate the estimated breakeven point in annual unit sales for the new product using the comput... View the full answer