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Required: What is the selling price of the 8th unit?

Required: What is the selling price of the 8th unit?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Question 4 Tempo, a car manufacturer company has developed several new products and one of them is a new type of luxury car seat. The estimated labour time for the first unit is 12 hours but a learning curve of 90 % is expected to apply for the first eight units produced. The cost of labour is shs.20 per hour. The cost of materials and other variable overheads is expected to total Shs. 320 per unit. Tembo Co plans on pricing the seat by adding a 40% mark-up to the total variable cost per seat, with the labour cost being based on the incremental time taken to produce the 8th unit. Required: What is the selling price of the 8th unit?
Transcribed Image Text:Question 4 Tempo, a car manufacturer company has developed several new products and one of them is a new type of luxury car seat. The estimated labour time for the first unit is 12 hours but a learning curve of 90 % is expected to apply for the first eight units produced. The cost of labour is shs.20 per hour. The cost of materials and other variable overheads is expected to total Shs. 320 per unit. Tembo Co plans on pricing the seat by adding a 40% mark-up to the total variable cost per seat, with the labour cost being based on the incremental time taken to produce the 8th unit. Required: What is the selling price of the 8th unit?
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