Final answer:
The question asks about the break-even point for a new product with two production methods. Exact break-even analysis requires fixed costs, variable costs, and selling price per unit, which are not fully provided. A shift to more labor-intensive production is suggested due to increased machine costs.
Step-by-step explanation:
The student is inquiring about the break-even point in annual unit sales of a new product using two different production systems: computer-assisted manufacturing and a labor-intensive production system. To calculate the break-even point, we need to know the fixed costs, variable costs, and the selling price per unit. However, in this hypothetical scenario provided, we don't have information on the selling price or the variable costs specifically associated with each production technology.
In a general context, the break-even point can be calculated using the formula:
- Break-Even Point (Units) = Total Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)
The context given mentions that the cost of machines increased, so there might be a shift toward less capital and more labor. That could imply that the labor-intensive system might have lower total costs under these circumstances, although without the exact cost structure of both production technologies, a precise break-even analysis cannot be completed.
Additionally, based on another related information, if a company faces a situation with limited demand relative to capacity (e.g., only demand enough for 2.5 firms), it suggests that not all firms will survive in the long run, impacting the production decisions and potentially the break-even analysis.