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Locksmith Inc

question 48

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Locksmith Inc.has an order from a bank for 50 specially designed safes, one for each bank branch.It is estimated that the first safe will require 75 hours of shop time and a 90% learning curve is expected.The labor rate is $15.00 per hour and the pricing policy of the company is to triple the labor cost of the order.
a.How many labor hours should the 50th unit require?
b.How many labor hours will the whole order require?
c.What is the customer's price for each safe?


Definitions:

Highly Profitable Products

Products that generate considerably higher profits compared to other products due to superior demand, premium pricing, or lower costs.

Competitors' Prices

Refers to the pricing information of similar products or services offered by companies competing in the same market.

Activity Cost Pool

A grouping of all costs associated with a particular activity, used in activity-based costing to allocate costs more accurately.

Machining

A manufacturing process that involves cutting, shaping, or removing material from a workpiece to create a desired part.

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