Homework Answers
| Capital intensive manufacturing method | ||
| breakeven point = fixed cost/contribution margin p.u | ||
| contribution margin | ||
| sale price | 31 | |
| less: variable cost | 16 | |
| (5+6+3+2) | ||
| contribution margin | 15 | |
| Fixed cost = (2278000+482000) = 2760000 | ||
| Breakeven point = 2760000/15 = 184000 | ||
| labor intensive manufacturing method | ||
| fixed cost = (1410000+482000) = 1892000 | ||
| contribution margin = 31-(5.50+8+4.50+2) = 11 | ||
| Breakeven point = 1892000/11 = 172000 units | ||
| 2) assume volume units sold = x | ||
| profit= contribution margin-fixed cost | ||
| capital intensive manufacturing method= 15x-2760000 | ||
| labor intensive manufacturing method = 11x-1892000 | ||
| 15x-2760000 = 11x-1892000 | ||
| 4x = 868000 | ||
| x = 217000 Units |
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