Captain Kitts has designed a new type of sailing boat, for which the cost of the first boat to be produced has been estimated as follows:
$
|
Materials
|
5,000
|
|
Labour (800 hrs × $5 per hr)
|
4,000
|
|
Overhead (150% of labour cost)
|
6,000
|
|
|
15,000
|
|
Profit mark-up (20%)
|
3,000
|
|
Sales price
|
18,000
|
It is planned to sell all the yachts at full cost plus 20%. An 80% learning curve is expected to apply to the production work. The management accountant has been asked to provide cost information so that decisions can be made on what price to charge.
(a) What is the separate cost of a second yacht?
(b) What would be the cost per unit for a third and a fourth yacht, if they are ordered separately later on?
(c) If they were all ordered now, could Captain Kitts quote a single unit price for four yachts and eight yachts.