Problem 1:ABC produce a special type of boat to be used by Navy. A 90% learning curve is expected to apply tothe production of this type of boat. It is agreed that boats will be supplied at variable costs plus 20%.The variable cost and the sale price of the first boat to be produced has been estimated as:Rs.Materials8000Labour (1000 hrs @Rs. 4 /hr)Variable overheads (200% of Direct Labour)4000800020000Profit (20%)4000Sale Price24000Order will be for a minimum of 2 boats. You have been asked to ascertain the average selling price perboat if the order is for: 2 boats; 4 boats; and 8 boatsAlso ascertain the separate selling price for 2nd, 3rd and 4t* boats.No. of boats Cumulative averagetime per boat (hrs)1000Total time for all boats (hrs) Incremental time (hrs)11000(x2)(x4)800 (for 1 extra unit)1440 (for 2 extra units)900180048103240

Statement of Learning Curve-90% Cumulative production…

ABC produce a special type of boat to be used by Navy. A 90% learning curve is expected to apply to the production of this type of boat. It is agreed that boats will be supplied at variable costs plus 20%. The variable cost and the sale price of the first boat to be produced has been estimated as: Rs. Materials Labour (1000 hrs @Rs. 4 /hr) Variable overheads (200% of Direct Labour) 8000 4000 8000 20000 Profit (20%) Sale Price 4000 24000 Order will be for a minimum of 2 boats. You have been asked to ascertain the average selling price per boat if the order is for: 2 boats; 4 boats; and 8 boats Also ascertain the separate selling price for 2nd, 3rd and 4th boats.

ABC produce a special type of boat to be used by Navy. A 90% learning curve is expected to apply to the production of this type of boat. It is agreed that boats will be supplied at variable costs plus 20%. The variable cost and the sale price of the first boat to be produced has been estimated as: Rs. Materials Labour (1000 hrs @Rs. 4 /hr) Variable overheads (200% of Direct Labour) 8000 4000 8000 20000 Profit (20%) Sale Price 4000 24000 Order will be for a minimum of 2 boats. You have been asked to ascertain the average selling price per boat if the order is for: 2 boats; 4 boats; and 8 boats Also ascertain the separate selling price for 2nd, 3rd and 4th boats.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Problem 1:
ABC produce a special type of boat to be used by Navy. A 90% learning curve is expected to apply to
the production of this type of boat. It is agreed that boats will be supplied at variable costs plus 20%.
The variable cost and the sale price of the first boat to be produced has been estimated as:
Rs.
Materials
8000
Labour (1000 hrs @Rs. 4 /hr)
Variable overheads (200% of Direct Labour)
4000
8000
20000
Profit (20%)
4000
Sale Price
24000
Order will be for a minimum of 2 boats. You have been asked to ascertain the average selling price per
boat if the order is for: 2 boats; 4 boats; and 8 boats
Also ascertain the separate selling price for 2nd, 3rd and 4t* boats.
No. of boats Cumulative average
time per boat (hrs)
1000
Total time for all boats (hrs) Incremental time (hrs)
1
1000
(x2)
(x4)
800 (for 1 extra unit)
1440 (for 2 extra units)
900
1800
4
810
3240

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