Xeno Industries manufactures microchips. The company generally experiences a learning effect on new
models, at least through the first 64 or so units. Data on a microchip appear below:
Labor time for first unit
200 hours
Labor rate
NT$300 per hour
Variable overhead
NT$50 per labor hour
Materials
NT$12,000 per microchip
The CFO of the company wants to know the expected total cost of making the first 8 units, assuming a
learning effect on labor of 80 percent. How much is the total cost of first 8 units?
A. NT$131,840
x2
x2
x2
B. NT$245,760
C. NT$325,376
D. NT$382,720
Units Produced
1
2
4
8
Cost Subject to Learning Curve
70,000.00
112,000.00
179,200.00
286,720.00
Cost Subject to Learning Curve
Direct Materials (8 x NT$12,000)
Total Costs for 8 units
286,720.00
96,000.00
382,720.00
D.