Randy Duck out has been asked to develop an estimate of the per-unit selling price (the price
Question:
Randy Duck out has been asked to develop an estimate of the per-unit selling price (the price that each unit will be sold for) of a new line of hand-crafted booklets that offer excuses for missed appointments. His assistant Doc Duck out has collected information that Randy will need in developing his estimate:
Cost of direct labor........................$20 per hour
Cost of materials............................$43.75 per batch of 25 booklets
Cost of overhead items.................50% of direct labor cost
Desired profit..................................20% of total manufacturing cost
Doc also finds out that
(1) They should use a 75% learning curve for estimating the cost of direct labor,
(2) The time to complete the 15tbooklet is estimated at 0.60 hour, and (3) the estimated time to complete the 25th booklet should be used as their standard time for the purpose of determining the unit selling price. What would Randy and Doc's estimate be for the unit selling price?
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