Organizational Decision Making
Write a paper of no more than 750 words in which you respond to the Broadening Your Perspective 18-1 activity titled “Decision Making Across the Organization” in Ch. 18 of Accounting.
Added on 21.11.2014 14:35
Attached is the Broadening Your Perspective 18-1 PDF to be used to complete the paper.
Added on 21.11.2014 14:36
Please use APA format and include intext citations and two references.
Broadening Your Perspective
DECISION MAKING ACROSS THE ORGANIZATION 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.
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 With the class divided into groups, answer the following. (a) 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. (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.
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