eost ealeulations in the presenee of learning Ralph is contemplating introduction of a new produet. Various materials will cost 200 per unit; labor will eost 37 per hour. The overhead LLA is OV = F +

.3DM$ + 42DLH, where DM$ denotes direet material dollars and DLH direet labor hours. The consulting engineer prediets adireet labor learning rate of 83%. (Direet materials will not exhibit any learning.) Ralph also prediets the first unit will require 140 direet labor hours. (Hint: 2 .. 2688 = .8300.)

a] Suppose Ralph anticipates produeing and selling 125 units. What is the minimum selling price per unit if this is to be a profitable produet? (Assume F is zero for this ealeulation.)

b] Suppose Ralph proceeds with manufaeturing. 220 units have been manufaetured.

What is the ineremental eost of 15 more units?

e] What happens to the marginai eost of producing this produet if Ralph manufaetures the extra units in [b] above?

AppendixLO1