Assignment One

• Lusaka Mall Limited has commenced business in Mandevu to meet the demand for assembling flat pack furniture that is being retailed by Tip-Top Ltd. Lusaka Mall will employ its own trade-staff on a contract by contract basis of which there is no shortage due to the current economic downturn. The disposable income for most households has been negatively affected because of reduced productivity due to the outbreak of a pandemic. Lusaka Mall bases prices on time for assembly plus any associated expenses. In the first month of operation staff reported that they are spending approximately 80% of their hours assembling three standard products, wardrobes, a corner sideboard and kitchens units. Further research reveals that these are three of the most popular products. More worryingly for the owner of Lusaka Mall are the customer complaints, especially in the first month, that they have been charged more than friends for assembly of the same product. A staff member has explained this is probably due to the learning effect. An analysis of job cards reveals the following information.

Cumulative Assembly	Wardrobe Cumulative time	Sideboard Cumulative time	Kitchen Cumulative time
1	8.0 hours	4.0 hours	20 hours
2	12.8 hours	7.6 hours	40 hours
4	20.48 hours	12.96 hours	80 hours
8	40.96 hours	23.33 hours	160 hours

Trade staff is paid K15 per hour or part of and Lusaka Mall charges its customers K25 per hour. Lusaka Mall wishes to set standard selling prices for these products to avoid customer complaints.

Required:

• Calculate the rate of learning associated with the assembly of each product.

(4 Marks)

• Calculate the selling price and profit per wardrobe for the fifth unit onwards

(6 marks)

(iii)If learning for Sideboards ceases after 8 units calculate the selling

price and profit per unit for every unit thereafter.

(6 Marks)