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# ACC 561 DECISION MAKING ACROSS THE ORGANIZATION

Write a paper that is at least 750 words (papers that are less than 750 words, will receive a reduction in points) in which you respond to the Broadening Your Perspective 18-1 activity titled “Decision Making Across the Organization” in Ch. 18 of Accounting.

DECISION MAKING ACROSS THE ORGANIZATION

BYP18-1 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.

Capital-   Labor-

Intensive   Intensive

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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## ACC 561 DECISION MAKING ACROSS THE ORGANIZATION

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# ACC 561 xxxxxxxx xxxxxx xxxxxx THE ORGANIZATION

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xxxxxxxx xxxxxx xxxxxx xxx Organization

xxxxxxxx xxxxxxxxxxxx requires xxxxxx continuous xxxxxxxx xxxxxxx These xxxxxxxxx are based xx the xxxxxxx qualitative or quantitative business analyses. xxxx x business accounting xxxxxxxx making xxxx xx the breakeven xxxxx xxxxxxxxx xxxxxxxxx point refers to the xxxxx xx sales xxxxx the company xx xxxxxxx xxxxx xxxxxx xxx makes loss. xxx breakeven xxxxx units xx determined xx dividing xxx total fixed xxxx xxxx xxx xxx unit contribution xxxxxx (Calculation a). xxx xxxx xxxxxxxxx beyond the breakeven analysis is to find out the xxxxx xxxxx after which the xxxxxxx will begin to make xxxxxx for each additional unit xxxxx xx the given xxxxx xxxxxxxx Company is going to introduce x new xxxxxxx xxx which two xxxxxxxxxxxxx xxxxxxx namely the xxxxxxxxxxxxxxxxx method and x xxxxxxxxxxxxxxx method xx available to xxx xxxxxxxx To evaluate each alternative we are considering the breakeven point xxxxx xxxx of xxx manufacturing methods. The xxxxxxxxx xxxx

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