ACC 561 DECISION MAKING ACROSS THE ORGANIZATION

Write a paper that is at least 750 words (papers that are less than 750 words, will receive a reduction in points) in which you respond to the Broadening Your Perspective 18-1 activity titled “Decision Making Across the Organization” in Ch. 18 of Accounting.DECISION MAKING ACROSS THE ORGANIZATIONBYP18-1 Martinez Company has decided to introduce a new product. The new product can bemanufactured by either a capital-intensive method or a labor-intensive method. The manufacturingmethod will not affect the quality of the product. The estimated manufacturing costs by thetwo methods are as follows.Capital-   Labor-Intensive   IntensiveDirect materials  $5 per unit   $5.50 per unitDirect labor   $6 per unit   $8.00 per unitVariable overhead   $3 per unit     $4.50 per unitFixed 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 unitsold, regardless of manufacturing method. InstructionsWith the class divided into groups, answer the following.(a) Calculate the estimated break-even point in annual unit sales of the new product if MartinezCompany uses the:(1) Capital-intensive manufacturing method.(2) Labor-intensive manufacturing method.(b) Determine the annual unit sales volume at which Martinez Company would be indifferent between the two manufacturing methods.(c) Explain the circumstance under which Martinez should employ each of the two manufacturing methods.Online