ACC 561 Week 5 Assignment Decision Making Across the Organisation

The Sanchez 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:

Capital-Intensive
Direct Materials 5$ per unit
Direct Labor 6$ per unit
Variable Overhead $3 per unit
Fixed Manufacturing Costs $2,508,000

Labor Intensive
Direct Materials 5.5$ per unit
Direct Labor 8$ per unit
Variable Overhead $4.5 per unit
Fixed Manufacturing Costs $1,538,000