Broadening Your Perspective Essay

In this paper the broadening Your Perspective Exercise 18.1 is completed. The exercise is about Martinez Company that has decided to move into a new product to its product line ( whoremonger Wiley & Sons, Inc. 2011). Two methods argon evaluated to determine what is the best method to use either bully-intensive or effortful method.Exercise 18-1 AIn this part of the exercise the break-even point in annual social unit gross revenue of the new product is forecast for the capital intensive manufacturing method and labor-intensive manufacturing method (John Wiley & Sons, Inc. 2011). To calculate the break-even point the conglomeration better represent has to be computed first. For the capital-intensive method the total situated cost is fixed Manufacturing cost-2508000 positivistic incremental selling expenses of 502000 equaling 3010000. The next step is to ensure the contribution coast per unit. For the capital-intensive method the contribution margin per unit is calculated b y the selling price of 30.00 minus the variable cost of take away materials-5, transfer labor-6, variable overhead-3, annual expense-2, thus equaling $14.00. Then the break-even point in unit sales for the capital-intensive method is calculated by the total fixed cost-3010000 divided by the contribution margin per unit of 14, thus evenly the break-even point in unit sales for the capital-intensive method is 215000 units.Next we calculate the labor-intensive method. 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 contribution margin per unit. For the labor-intensive method the contribution margin per unit is calculated by theselling price of 30.00 minus the variable cost of direct materials-5.50, direct labor-8.00, variable overhead-4.50, annual expense-2, thus equaling $1 0.00. Then the break-even point in unit sales for the labor-intensive method is the total fixed cost-2040000 divided by the contribution margin per unit of 10, thus equally the break-even point in unit sales for the labor-intensive method is 204000 units.Exercise 18-1 BIn the next part of the exercise it states to determine the annual unit sales volume at which Martinez Company would be indifferent between the both manufacturing methods (John Wiley & Sons, Inc. 2011). To determine the indifference point of the annual unit sales of the capital-intensive and labor-intensive method the total fixed cost and contribution is used. This is calculated by capital-intensive total fixed cost of 3010000 minus labor-intensive total fixed cost of 2040000 divided by the difference of the contribution margins of capital-intensive-14 and labor intensive-10. then totaling 242500 units as the indifference point of the two manufacturing methods.Exercise 18-1 CThe work question to complete the exerci se states, Explain the circumstance under which Martinez should put on each of the two manufacturing methods (John Wiley & Sons, Inc. 2011). Depending on the goal or forecast of how much(prenominal) sales are to be circulateed determines the manufacturing method that should be used. If the business expects to reach sales beyond the indifference point of 242500 units then the capital-intensive method would be the best manufacturing method to be used. If sales are forecasted to be at a lower place 242500 then the labor intensive method should be used. Thus the ationale to withdraw the manufacturing method depending on sales of units assures that the higher profit margin is obtained.ReferencesJohn Wiley & Sons, Inc. (2011). Accounting, 4E, Exercise 18-1. Retrieved from www.ecampus.phoenix.edu/wileyassignment