Price setting with learning curve costs Home Products Enterprises just completed as- sembly of the first 500 units of its new 10x12 utility building that it sells through lumber stores. The company plans production of 7,500 more units during the current period and wants to budget labor and material for the product. The first 500 units required a total of 5,000 hours of direct labor at a total cost of $48,000. Direct materials cost $225,000 for the 500 units. Based on past experience, the company expects produc- tion to be subject to a learning curve of 80 percent, with the steady state occurring after four doublings of production. Management sets new product prices at 190 percent of prime cost.

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REQUIRED a. Determine the average cumulative time of producing all 8,000 units. b. Compute the total prime cost of all 8,000 units and the selling price per unit.