1) Identify the target cost.

2) Calculate the direct material cost per unit in light of the new information in point.

3) Calculate the average direct labour cost per unit in light of the new information in point.

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Direct labour cost: the webcam uses 45 min of direct labour, which costs $34.67 per hour. The use of more standard parts, however, will mean that whilst the first unit would still be expected to take 45 minutes, there will now be an expected rate of learning of 90% (Where 'b' = -0.152). This will end after the first 100. Direct labour cost: the webcam uses 45 min of direct labour, which costs $34.67 per hour. The use of more standard parts, however, will mean that whilst the first unit would still be expected to take 45 minutes, there will now be an expected rate of learning of 90% (Where 'b' = -0.152). This will end after the first 100.

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To identify the target cost we need to calculate the total cost per unit for the webcam using the ne... View the full answer