Question 4 1 pts Question IV: CVP & Operating Leverages [20 marks] UST Manufacturing Corporation Hong Kong has decided to introduce a new product. The product can be manufactured using either robotic or a labor method. The manufacturing method will not affect the quality or sales of the product. The estimated manufacturing costs of the two methods are as follows: Robotic Labor Variable Manufacturing Cost $14.00 per unit $17.60 per unit Fixed Manufacturing Cost $2,440,000 per year $1,320,000 per year The company's market research department has recommended an introductory selling price of $30 per unit for the new product. The annual fixed selling and administrative expenses of the new product are $500,000. The variable selling and administrative expenses are $2 per unit regardless of how the new product is manufactured. Required: a. Calculate the break-even point in units if UST Corporation uses the : 1. Robotic manufacturing method. 2. Labor manufacturing method. [5 marks] b. Determine the unit sales volume at which the net income is the same for the two manufacturing methods. [5 marks] c. Assuming sales of 260,000 units, what is the degree of operating leverage if the company uses the: 1. Robotic manufacturing method. 2. Labor manufacturing method. [5marks] d.Which method from requirement (c) gives higher operating leverage? What caused the higher operating leverage? What does higher operating leverage imply? Which method would you recommend using for production if the company's market research department foresees that next five years' sales will be increasing? Elaborate the reasons(s).. [5 marks]