The Martinez Company has decided to introduce a new product. The new product can be manufactured by

The 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-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

Martinez 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.