Austen CoProduced a Pilot Run of Eighty Units of a Recently

question 65

Essay

Austen Co.produced a pilot run of eighty units of a recently developed part used in the finished products.Austen Co.expects to produce and sell 2,560 units annually.The pilot run required 40 direct labor hours for the eighty units, averaging 0.5 direct labor hours per unit.Austen experiences an eighty percent learning curve.
Required:
Calculate the average direct labor hours per unit for the first 2,560 units (including the pilot run) produced.

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Definitions:

Desired Profit

The target amount of money a business aims to earn over a certain period.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Average Variable Cost

The total variable costs of production divided by the number of units produced, representing the variable cost per unit.

Store Traffic

The number of people who visit a retail location within a given time frame.