What is the separate cost of a second yacht

Reference no: EM13920420

Captain Kitts has designed a new type of sailing boat, for which the cost of the first boat to be produced has been estimated as follows:

Materials	5,000
Labour (800 hrs × $5 per hr)	4,000
Overhead (150% of labour cost)	6,000
	15,000
Profit mark-up (20%)	3,000
Sales price	18,000

It is planned to sell all the yachts at full cost plus 20%. An 80% learning curve is expected to apply to the production work. The management accountant has been asked to provide cost information so that decisions can be made on what price to charge.

(a) What is the separate cost of a second yacht?

(b) What would be the cost per unit for a third and a fourth yacht, if they are ordered separately later on?

Reference no: EM13920420

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