Refer to Problem E.17. The direct labor cost to produce a night vision goggle is $30 per hour. Job setup costs and direct material costs are $40, and material costs are $15 per goggle. The overhead charge for producing the goggles is at 60% of labor, material, and setup costs. Clear Site sells the goggles for $200 per unit. Clear Site’s learning rate is 70%:

1. What is the unit cost for 25 units, given that the first unit took 60 hours to produce?

2. How many units should be sold for Clear Site to breakeven (Total revenue = Total cost)?

Data from problem E.17

Clear Site Inc. is a manufacturer of night vision devices. The company is about to bid on a new night vision goggle for the military. The product uses state-of-the-art infrared illuminator technology. Clear Site’s learning rate for producing such products is estimated to be 70%. The time it will take to produce the first unit of this new night vision goggles is 60 hours. The contractual requirements call for a delivery 35 of these goggles: