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14. A company has developed an Electronic gadget. Material cost per unit 320,000. The assembling of the product follows a learning curve of 80% i.e
14. A company has developed an Electronic gadget. Material cost per unit 320,000. The assembling of the product follows a learning curve of 80% i.e learning curve index 0.322. The first unit was produced for demonstration purpose which consumed 200 labour hours @ 200. Seeing the demo, one party gave order of 20 units. The company offered a rate based on labour hours required, charging production overheads of 120% of labour cost and 20% profit on price quoted. The company supplied the 20 units with full satisfaction of the party. Subsequently, another party placed an order for 50 units on the basis of the quotation placed by the company according to the above pricing policy. After receiving the supply of half of the quantity, the second party cancelled the order for balance qty. First unit produced will be preserved for demonstration and will not be sold. Calculate the profit in supplying 25 units to the second party
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