Learning Curves Hat Tricks Company (HTC) is a Buffalo, New York, manufacturer of hats and gloves. Recently the company purchased a new machine to aid in producing the hat product lines. Production efficiency on the new machine increases with the workforce experience. It has been shown that as cumulative output on the new machine increases, average labor time per unit decreases up to the production of at least 3,200 units. As HTC’s cumulative output doubles from a base of 100 units produced, the average labor time per unit declines by a learning rate of 80%.
HTC has developed a new style of men’s hat to be produced on the new machine. One hundred of these hats can be produced in a total of 40 labor hours. All other direct costs to produce each hat are $12 per hat, excluding direct labor cost. Direct labor cost per hour is $25. Fixed costs are $8,000 per month, and HTC has the capacity to produce 3,200 hats per month.
Required HTC plans to set the selling price for the new men’s hat at 200% of direct production cost. If the company is planning to sell 100 hats, what is the selling price? If the plan is to sell 800 hats, what should be the selling price?
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.