What is the standard cost per unit for the fourth quarter

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Reference no: EM13920405

Learning curves and standard costs

A company needs to calculate a new standard cost for one of its products. When the product was introduced, the standard variable cost of the first unit was as follows.

Cost per unit $

Direct material	10 kg @ $3 per kg	30
Direct labour	10 hours @ $9 per hour	90
Variable overhead	10 hours @ $5 per hour	50
Total		170

During the following year, a 90% learning curve was observed. The cumulative production at the end of the third quarter was 50 units and the budgeted production for the fourth quarter is 10 units.

Required

(a) What is the standard cost per unit for the fourth quarter assuming that the 90% learning curve still applies?

(b) What is the standard cost per unit for the fourth quarter assuming the learning curve had reached a steady state ie peak efficiency was reached after the 50th unit was produced?

Reference no: EM13920405

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