An autoclaves and sterilizers manufacturer has estimated the manufacturing costs

Question

An autoclaves and sterilizers manufacturer has estimated the manufacturing costs of its new product as follows:

Cost Elements Cost Rate
Direct labor $20 per hour
Material $270 per unit
Overhead costs 110% of direct labor

The company's engineer estimated that the production of the new product has a 88% learning curve applied to labor required, and the time to complete the first unit was 54 labor hours. Assume the time required to complete the 10th unit and the competitor's price of $2053.44 per unit are used for cost estimation purposes. What is the total manufacturing cost per unit for the company to remain competitive?

Explanation / Answer

the maximum profit per unit for the company to remain competitive= 2053.44*10 -( 54*20+270*10+1.1*54*20) = 20534.4 -(4268) = $16266.4

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