Broadening your perspectives
Tiffany Tyler
ACC/561
November 2, 2015
Sonja Felder

Exercise 18.1
Martinez Company has decided to introduce a new product. This new product can be either manufactured by either a capital-intensive method or a labor-intensive method. The method using manufacturing will not affect the quality of the new product (Kimmel,2011). The following are Calculations that will be estimating the breakeven point in the annual unit sales of the new product using the labor-intensive method and the capital- intensive method. Exercise 18-1 A
In exercise 18-1 A it explains what a breakeven point is, for a company to be able to calculate the break-even point they must have the total fixed cost this has to be computed before anything else is done. For the next method which is the capital-intensive method is total fixed cost the fixed Manufacturing cost-2508000 plus incremental selling expenses of 502000 which equals 3010000. The company has to find the contribution margin per unit .The capital-intensive method the contribution margin per unit is calculated by the selling price of 30.00 minus the variable cost of direct materials-5, direct labor-6, variable overhead-3, annual expense-2, which is equaling $14.00. The break-even point in unit sales for the capital-intensive method is then calculated by the total fixed cost-3010000 which is divided by the contribution margin per unit of 14, equally the break-even point in unit sales for the capital-intensive method is 215000 units. The Next step is the company must calculate the labor-intensive method. In order for a company to be able to calculate the break-even point the total fixed cost has to be computed first. For the labor-intensive method the total fixed cost is fixed manufacturing cost-1538000 plus incremental selling expenses of 502000 equaling 2040000. The next step is to find the