Calculate the estimated break-even point in annual unit sales of the new product if Crane Company uses (1) the capital-intensive manufacturing method, or (2) the labour-intensivemanufacturing method.Break-even pointQuestion Part Score(1)Capital-intensive manufacturing methodAnnual sales volumeunitsDetermine the annual unit sales volume at which there would be no difference between methods.(2)Labour-intensive manufacturing methodunitsunits Crane Company has decided to introduce a new product that can be manufactured by either a capital-intensive method or a labour-intensive method. The manufacturing method will not affectthe quality of the product. The estimated manufacturing costs under the two methods are as follows:Direct materialsDirect labourVariable overheadFixed manufacturing costsCapital-Intensive$10.00 per unit$12.00 per unit$6.00 per unit$2,624,960Labour-Intensive$11.00 per unit$16.00 per unit$9.00 per unit$1,612,000Crane's market research department has recommended an introductory unit sales price of $64. The incremental selling expenses are estimated to be $522,080 annually, plus $4 for each unitsold, regardless of the manufacturing method.

BREAKEVEN POINT Break Even means the volume of production or sales where there is no profit or…

Calculate the estimated break-even point in annual unit sales of the new product if Crane Company uses (1) the capital-intensive manufacturing method, or (2) the labour-intensive manufacturing method. Break-even point Question Part Score (1) Capital-intensive manufacturing method Annual sales volume units Determine the annual unit sales volume at which there would be no difference between methods. (2) Labour-intensive manufacturing method units units

Calculate the estimated break-even point in annual unit sales of the new product if Crane Company uses (1) the capital-intensive manufacturing method, or (2) the labour-intensive manufacturing method. Break-even point Question Part Score (1) Capital-intensive manufacturing method Annual sales volume units Determine the annual unit sales volume at which there would be no difference between methods. (2) Labour-intensive manufacturing method units units

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 7CE

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Cool Pool has these costs associated with production of 20,000 units of accessory products: direct materials, $70; direct labor, $110; variable manufacturing overhead, $45; total fixed manufacturing overhead, $800,000. What is the cost per unit under both the variable and absorption methods?
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