1. A supplier charges $11.99 per unit for bulk lots of proprietary 6 ft. high speed HDMI cables. Assuming:

1. A profit margin of 8% and a cost markup pricing approach
2. Direct material costs of $6.50 per unit
3. Direct labor costs of $1.50 per unit
4. An industry average of overhead costs of 200% of labor costs.

Do you feel that the price per unit is fair, or do you need to apply pressure for a substantially lower price? Why?

2. A labor intensive product takes 115 hours to assemble for the first unit. How long would it take to assemble the 25^thunit assuming a 92% learning rate?

3. If the learning rate is assumed to be 88%, how long would it take to assemble the 50^thunit?