A metal works fabricator is about to release a new model of his firm's copper sculpture and fountain

The operations manager estimates that this product is subject to a 90 percent learning curve on labor only–the material bill is not affected by experience. The firm prices its work based on cost–the sum of materials plus 30 percent and labor plus 50 percent. (This allows the firm to practice a form of "demand management" for its very popular works.) The first item has already been finished; the material bill was $800 and labor totaled 40 hours. The firm pays its metalworking artisans an average of $18 per hour. What should be the asking price of the first unit? The second?

Based on the pricing formula, the first unit should be priced at $800 ? 1.30 + 40 ? $18 ? 1.50 = $1,040 + $1,080 = $2,120. The second unit will be cheaper because of the learning effect: $800 ? 1.30 + 36 ? $18 ? 1.50 = $1,040 + 972 = $2,012.

Business

You might also like to view...

Barry is known to challenge unproductive behavior in team meetings by consistently trying to ensure his team members display proper behavior. What role is Barry playing?

A) Task-facilitating role B) Enforcing role C) Confronting role D) Monitoring role

Business

________ ________ should be submitted to the steering committee in writing

Fill in the blank with the appropriate word.

Business