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Learning Curve help, please!!!! SHEALY TABLES Shealy runs a small business in upstate South Carolina in which he builds kitchen tables. He has recently designed
Learning Curve help, please!!!!
SHEALY TABLES Shealy runs a small business in upstate South Carolina in which he builds kitchen tables. He has recently designed a new table with many intricate carvings. Because Shealy has never done this type of carving work before, he believes a learning curve will apply to the time required to make the tables. Shealy estimates the time required will follow an 88% average-time learning curve. Shealy has just completed the first table, which required 200 hours of direct labor. Direct materials are $150 for each table, and overhead is $50 per table. Shealy's total direct labor cost per hour is $14. REQUIREMENTS: 1) On average, how long will it take to make each of the first three tables? 2) Holt realizes that Shealy is experiencing a learning curve effect while building tables. She has told Shealy to calculate the direct labor cost of making the 20th table. She is willing to pay a price of twice that direct labor cost for the table that she buys. What price is she willing to pay? 3) Shealy has decided to only make 80 of these tables. He wants to keep the last thirteen for himself. How many hours will it take for Shealy to make the last thirteen tables? 4) Shealy changes his mind and decides to make many tables. a. How long (in number of tables) will the learning curve effect last? Explain fully. b. What price should Shealy charge in order to make a 25% gross profit on tables Step by Step Solution
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