Question

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The ABC Corporation has purchased 50 pieces of a specially designed electronic component at $2,000 per unit. In the $2,000 selling price, $1,000 represents direct labor. An audit of product costs for the first 50 units established that the operation is subject to an 80 percent cumulative average learning curve. What should ABC pay for the purchase of 350 more units? Solution:

Answer 1

teauning dak80 %. COS+ Encuuredto iast 50 unds loo0 Cest Aveage cost encuured Hos 400 uni $1000x 08x0gx0:8 512 4518 x400 $2,04,800 len cast incuued tel tiust 50 untts $304,800 50x $1.000$ (S0 000) 154,800 Puchaue co+ Of 350 mOre unih 350*81000 : $850,00 0 ta boucos &154, RO0 $504,800 ABC Showd pay 504,P00 FOI next 300 cunt COSH per unit $504,e00 $ 1442-28 350 cast paid tet labour tot 80% leauning auve $164,80 0

CuVe Cos paid te 85% kauning 614 181 4 614.12.6x 400 f0rar cast tor 400 unlt 245,650 len cost incued tet ult 30 unih $245650 Cs01 000) $195,650 Cas pard to babou de 85% is 4195660 leauning cuive heips to analy a-Loolure puotet ue latonsheps dureng tamilfouisateon phaie puatuc 01 puoces to anive at COSt ettimate As tre leaunina curue uate nea osee decueaes the etiarency o labou deeiea increares and cutimately the Aoeiageca per the Cunit also deaeaues trertoe highee ericiuncy loser sate