Learning Curve

A buyer at an aerospace company has purchased $100$ units of a complex avionics component at a

per$-$unit price of $$260,$ and has collected the following cost data for the component:

Table $1.$ Component Cost Data

Costs Amount

Direct material $$100$

Direct labor $60(4$ hours @ $$15$ per hour$)$

Overhead $72(120\%$ of direct labor$)$

Total costs $232$

Profit $28$

Total per unit $260$

What should the buyer be willing to pay for the next $900$ pieces, assuming an $85\%$ learning

curve? What assumptions did you make in coming up with this estimate?