[Sonam.C]

Galliano Company has decided to introduce a new product. The new product can be manufactures by either a capital-intensive method or 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-Intensive Labor-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

Galliano'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.
Required:
A) Calculate the estimated break-even point in annual unit sales of the new product if Galliano Company uses the:
I. Capital-intensive manufacturing method.
Ii. Labor-intensive manufacturing method.
B) Determine the annual unit sales volume at which Galliano Company would be indifferent between the two manufacturing method.
C) Explain the circumstances under which Galliano should employ each of the two manufacturing methods.

[paraclete]

And the question is?

[Sonam.C]

its written above..

Galliano Company has decided to introduce a new product. The new product can be manufactures by either a capital-intensive method or 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-Intensive Labor-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

Galliano'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.
Required:
a) Calculate the estimated break-even point in annual unit sales of the new product if Galliano Company uses the:
i. Capital-intensive manufacturing method.
ii. Labor-intensive manufacturing method.
b) Determine the annual unit sales volume at which Galliano Company would be indifferent between the two manufacturing method.
c) Explain the circumstances under which Galliano should employ each of the two manufacturing methods.

[paraclete]

I don't provide worked answers what is your problem

[Sonam.C]

How to determine and calculate the annual unit sales volume at which Galliano Company would be indifferent between the two manufacturing method?

And how to explain the circumstances under which Galliano should employ of the two manufacturing methods.

[paraclete]

how to determine and calculate the annual unit sales volume at which Galliano Company would be indifferent between the two manufacturing method?

In my opinion that point would be reached when sales exceed 250,000 units. Divide the difference in fixed manufacturing costs by the difference in variable unit costs .the company would only remain indifferent within a small window of production volumes

and how to explain the circumstances under which Galliano should employ of the two manufacturing methods.

This comes down to long run marginal cost. One manufacturing method will be more exconomical for smaller quantities than the other also availabilty of finance is a factor. You are not told the capital required and can only surmise that it is in someway related to fixed manufacturing cost

So the considerations are projected production volumes and finance