Stanley Electronics Products, Inc., finds that new-product production is affected by an 80 percent learning effect. The company has just produced SO units of output at 100 hours per unit. Costs were as follows:
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Materials @ $20
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$1,000
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Labor and labor-related costs:
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Direct labor-100 hours @ $8
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800
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Variable overhead-100 hours 0 $2
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200
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$2,000
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The company has just received a contract calling for another SO units of production. It wants to add a 50 percent markup to the cost of materials and labor and labor-related costs. Determine the price for this job.