Reference no: EM132903173

Bidding and learning curve analysis. Cooper Corporation has received a contract to supply 240 units of new telecommunications equipment. The direct materials costs are P60,000 per unit. The average direct manufacturing labor costs for each unit (in the first lot of 30 units) was estimated to be P40,000. Direct manufacturing labor on a per-lot basis is subject to a 90% cumulative average-time learning model. A 90% learning curve implies q = -0.152.

Variable manufacturing overhead was estimated to be 60% of direct manufacturing labor cost. Cooper's price includes a markup of 25% on total variable manufacturing costs. The cumulative average-time learning model has proven to be accurate over the first two lots, totaling 60 units. Maximum efficiency is expected to be achieved with the production of 240 units.

Required:

Problem 1. Determine Cooper Corporation's cumulative average unit cost of manufacturing labor for production of the 240 units contracted for.

Problem 2. Determine the total variable manufacturing costs for producing the 240 units of the new telecommunications equipment.

Problem 3. Assume Cooper Corporation is asked to produce additional telecommunications equipment beyond the 240 units currently under contract. Calculate the unit price Copper should bid, employing the same markup that was used in the original bid. (cma)