Question

Military Projectiles inc is starting to produce a new product. The company is planning to bid for a long term order for this new product. They have the following data:

-First unit direct labor hours: 400hr @ $150/hr

-First unit direct material cost: $100,000

-Cumulative direct labor hours for next nine units: 2126/hr

-Cumulative direct material cost for next seven units: $557,400

Company expects an order of 1,600 units (including all made so far). Company expects overhead costs to be 50% of direct cost. They plan to charge $100,000 per unit. Calculate average percentage markup (or avg. percentage loss) per unit in total labor & material cost. What will be the cost of unit 1600 & 1601?

Answer 1

for 1st Unit cost Direct labor is (440hr*150 per hr) $60,000 and direct material cost 1$00,000 and OH cost is 50% of direct cost so loss % is 140%

from 2nd unit Direcct labor cost 2126/9=232.22 per hr $150.

If we produce 1600= 1st unist Direct cost $160000 and rest 1599 unit cost $183,983,985.71 adn OH is 50% of Direct cost so 50% of ($183,983,985.71+$160,000)= 92,071,992.86 so total cost for 1600 unit is $276, 215,978.57 as sales is 1600,00,000 so loss is $116,215,978.57

if we produce 1601 loss is $116,288,571.43