Question
Tambo, a bike manufacturer company has developed several new products and one of them is a new buffalo bike. The estimated labour time for the
Tambo, a bike manufacturer company has developed several new products and one of them is a new buffalo bike. The estimated labour time for the first unit is 10 hours but a learning curve of 80 % is expected to apply for the first nine units produced. The cost of labour is shs.300 per hour. The cost of materials and other variable overheads is expected to total Shs. 500 per unit. Tambo Co plans on pricing the bike by adding a 30% mark-up to the total variable cost per bike, with the labour cost being based on the incremental time taken to produce the 9th unit. What is the selling price of the 9th unit?
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