Lambda Computer products competed for and won a contract to produce two units of a new type of computer based on optics technology. The first took Lambda 5,000 hours to produce and required $250,000 worth of material and supplies.
The second unit took 3, 500 hours and used $200,000 worth of material and supplies.
Labor is $30 per hour. Lambda was asked to present a bid for an additional 10 units as soon as the first contract was completed.
If Lambda charges a profit of 10% of cost what would the bid be?