Crane Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows. Direct materials Direct labor Variable overhead Fixed manufacturing costs (a) Crane' market research department has recommended an introductory unit sales price of $40.00. The selling expenses are estimated to be $622,000 annually plus $2.00 for each unit sold, regardless of manufacturing method. Your answer is correct. Capital-Intensive $6.00 per unit $7.00 per unit $4.00 per unit $3,200,000 Calculate the estimated break-even point in annual unit sales of the new product if Crane Company uses the: 1. Capital-intensive manufacturing method. 2. Labor-intensive manufacturing method. Break-even point in units (b) eTextbook and Media Labor-Intensive $7.00 per unit $10.00 per unit $5.50 per unit $2,028,500 Annual unit sales volume Capital-Intensive 182,000 Labor-Intensive units 171,000 Determine the annual unit sales volume at which Crane Company would be indifferent between the two manufacturing methods. Attempts: 1 of 5 used
Crane Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows. Direct materials Direct labor Variable overhead Fixed manufacturing costs (a) Crane' market research department has recommended an introductory unit sales price of $40.00. The selling expenses are estimated to be $622,000 annually plus $2.00 for each unit sold, regardless of manufacturing method. Your answer is correct. Capital-Intensive $6.00 per unit $7.00 per unit $4.00 per unit $3,200,000 Calculate the estimated break-even point in annual unit sales of the new product if Crane Company uses the: 1. Capital-intensive manufacturing method. 2. Labor-intensive manufacturing method. Break-even point in units (b) eTextbook and Media Labor-Intensive $7.00 per unit $10.00 per unit $5.50 per unit $2,028,500 Annual unit sales volume Capital-Intensive 182,000 Labor-Intensive units 171,000 Determine the annual unit sales volume at which Crane Company would be indifferent between the two manufacturing methods. Attempts: 1 of 5 used
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter17: Activity Resource Usage Model And Tactical Decision Making
Section: Chapter Questions
Problem 18E: A company is considering a special order for 1,000 units to be priced at 8.90 (the normal price...
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