Hariba Ltd is a manufacturer of industrial control systems. It has designed a new system called the Cheeto and expects to produce the Cheeto in a...

1. Hariba Ltd is a manufacturer of industrial control systems. It has designed a new system called the Cheeto and expects to produce the Cheeto in a continuous operation over an 18 month period.

During this period, it is expected that a total of sixteen Cheeto'ss will be produced  and sold. The production of the Cheeto is a labour intensive operation and units are produced one after another.

The costs of producing the first Cheeto are as follows:

Skilled Labour - 1,200 hours at a rate of £30 per hour

Unskilled Labour - 1,800 hours at a rate of £25 per hour

Materials - £25,000

   Overheads - £10 per labour hour worked (total of Skilled and Unskilled)

            It is known that in producing any product, Skilled Labour usage experiences an 80%      learning curve effect and Unskilled Labour usage experiences a 90% learning curve effect.

           Hariba has decided to set the selling price per unit of the Cheeto by using the full cost        plus method of pricing, with a profit mark up of 25%

Required:

(a)  Calculate the minimum selling price of

            (i) the first unit of the Cheeto.                                   

            (ii) the second unit of the Cheeto

            (iii) the first 16 units of the Cheeto if ordered together                   

(b)   Explain the logic, uses and limitations of the learning curve model.            

(c)    Identify the method of setting the selling price that Hariba has chosen. Explain how the learning curve model will affect the calculations      

this management accounting question, can you give me the proccess and answer, thank you so much