Windu Enterprises uses a manufacturing process that is very labor intensive to manufacture its multicolored laser...

    

Transcribed Image Text:

Windu Enterprises uses a manufacturing process that is very labor intensive to manufacture its multicolored laser vegetable slicers. Windu is considering a change to a more automated manufacturing process. The cost structure information for Windu's options are listed below. Windu sells its only product for $25 per unit. Current Method . Costs Fixed Manufacturing Costs Variable Manufacturing Cost per unit $180,000 $15 Automated Method $240,000 $13 Required. 1. Compute the breakeven points for both production methods 2. Compute the point of indifference for these two production methods (ie, at what number of units of production will income be equal for both methods?) 3. Calculate the Operating Leverage Factor for both methods at the point of indifference 3. Calculate the Operating Leverage Factor for both methods at the point of indifference 4. If Windu's management intends to produce and sell 35,000 units, which production method should they use? 5. By how much per unit (nearest $.01) would the current method's variable cost need to decrease in order for management to be indifferent at the planned production level of 35,000 units? How might this be achieved without significant wage concessions by current direct labor employees? Windu Enterprises uses a manufacturing process that is very labor intensive to manufacture its multicolored laser vegetable slicers. Windu is considering a change to a more automated manufacturing process. The cost structure information for Windu's options are listed below. Windu sells its only product for $25 per unit. Current Method . Costs Fixed Manufacturing Costs Variable Manufacturing Cost per unit $180,000 $15 Automated Method $240,000 $13 Required. 1. Compute the breakeven points for both production methods 2. Compute the point of indifference for these two production methods (ie, at what number of units of production will income be equal for both methods?) 3. Calculate the Operating Leverage Factor for both methods at the point of indifference 3. Calculate the Operating Leverage Factor for both methods at the point of indifference 4. If Windu's management intends to produce and sell 35,000 units, which production method should they use? 5. By how much per unit (nearest $.01) would the current method's variable cost need to decrease in order for management to be indifferent at the planned production level of 35,000 units? How might this be achieved without significant wage concessions by current direct labor employees?

Answer rating: 100% (QA)

The image you have provided contains information about the cost structure for a company named Windu Enterprises and it poses a number of questions based on this information Lets break down these quest... View the full answer