ACCOUNTING

Martinez 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-IntensiveLabor-Intensive 

Direct materials $5 per unit  $5.50 per unit

Direct labor $6 per unit $8.00 per unit 

Variable overhead $3 per unit $4.50 per unit 

Fixed manufacturing costs $2,508,000 $1,538,000 

Martinez's market research department has recommended an introductory unit sales price of $30. The incremental selling expenses are estimated to be $502,000 annually plus $2 for each unit sold, regardless of manufacturing method. 

Instructions 

 answer the following: 

Calculate the estimated break-even point in annual unit sales of the new product if Martinez Company uses the: 

1.Capital-intensive manufacturing method. 

2. Labor-intensive manufacturing method.