PLEASE SHOW YOUR WORK! Problem 2 Tracey Corporation has decided to introduce a n

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PLEASE SHOW YOUR WORK!



Problem 2 Tracey Corporation has decided to introduce a new product.  The product can be manufactured using either an automated-intensive or labor-intensive method.  The manufacturing method will not affect the quality or sales of the product.  The estimated costs of the two methods are as follows: Automated- Labor- intensive intensive Variable expenses $16.00 per unit $19.60 per unit Fixed expenses $2,940,000 $1,820,000 The company's market research department has recommended an introductory selling price of $30 per unit for the new product. Required a. Calculate the break-even point in units and dollars for BOTH methods. b. Determine the unit sales volume at which the net operating income is the same for the two manufacturing methods.  (HINT: take the difference in the fixed expenses and divide by the difference in the contribution margins.  It doesn't come out even so don't panic.) c. Assume that the company expects to sell 250,000 units.  Prepare two contribution format income statements, one assuming that products are manufactured using the automated- intensive method and one assuming that products are manufactured using the labor- intensive method.  Put your answers on the template provided on the next page.
Automated-Intensive In Total Per Unit Sales (250,000 units) Less variable expenses Contribution margin Less fixed expenses Net operating income Labor-Intensive In Total Per Unit Sales (250,000 units) Less variable expenses Contribution margin Less fixed expenses Net operating income d. Using the information in part (c), what is the margin of safety (units, dollars, and percentage) for BOTH methods? e. Using the information in part (c), what is the degree of operating leverage for BOTH methods? f. What is your recommendation to management concerning which manufacturing method should be used?  A really great answer will address each of the things in steps (a) through (e).






PLEASE SHOW YOUR WORK!



Problem 2 Tracey Corporation has decided to introduce a new product.  The product can be manufactured using either an automated-intensive or labor-intensive method.  The manufacturing method will not affect the quality or sales of the product.  The estimated costs of the two methods are as follows: Automated- Labor- intensive intensive Variable expenses $16.00 per unit $19.60 per unit Fixed expenses $2,940,000 $1,820,000 The company's market research department has recommended an introductory selling price of $30 per unit for the new product. Required a. Calculate the break-even point in units and dollars for BOTH methods. b. Determine the unit sales volume at which the net operating income is the same for the two manufacturing methods.  (HINT: take the difference in the fixed expenses and divide by the difference in the contribution margins.  It doesn't come out even so don't panic.) c. Assume that the company expects to sell 250,000 units.  Prepare two contribution format income statements, one assuming that products are manufactured using the automated- intensive method and one assuming that products are manufactured using the labor- intensive method.  Put your answers on the template provided on the next page.
Automated-Intensive In Total Per Unit Sales (250,000 units) Less variable expenses Contribution margin Less fixed expenses Net operating income Labor-Intensive In Total Per Unit Sales (250,000 units) Less variable expenses Contribution margin Less fixed expenses Net operating income d. Using the information in part (c), what is the margin of safety (units, dollars, and percentage) for BOTH methods? e. Using the information in part (c), what is the degree of operating leverage for BOTH methods? f. What is your recommendation to management concerning which manufacturing method should be used?  A really great answer will address each of the things in steps (a) through (e).

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Can you please repost the question properly, because unable to see the complete question at one instance........

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