Comfy Limited manufactures glass ornaments and housewares. The business makes use of unskilled labour and provides training to do hand crafting of the goods. In January, they decided to add a fruit bowl to the range. It took 45.60 hours to complete the first two fruit bowls. It was found that labour hours reduced as cumulative output increased, and it is expected that this trend will continue until 64 fruit bowls have been manufactured. The total number of hours to complete the next two fruit bowls was 41.04 hours. The labour and material costs to manufacture the first four fruit bowls, which have already been sold, were as follows: Direct materials: R1 360 Direct labour: R1 420 Additional information: A gift shop owner saw these fruit bowls and has asked for a quotation for 12 to add to its range of products Since the first four fruit bowls were manufactured, the price of material increased by 8%, and the cost of labour by 15%. Comfy Limited paid the designer of the fruit bowl R1 600. They have committed to producing and selling only 64 of these fruit bowls which will be complete within the next few months. Sundry materials amount to R1.50 per fruit bowl. Other variable manufacturing overheads are allocated at R1.00 per direct labour hour. Monthly fixed costs of the business amount to R15 200, of which 10% applies to the above order Required: a) Calculate the learning curve b) Calculate the quotation price for the 12 fruit bowls if the business requires a profit margin of 25% on quotation price. Note: round off ALL calculations to the nearest two decimal places. c) Calculate the total time required to manufacture units 17 to 32
Comfy Limited manufactures glass ornaments and housewares. The business makes use of unskilled labour and provides
training to do hand crafting of the goods. In January, they decided to add a fruit bowl to the range. It took 45.60 hours to
complete the first two fruit bowls. It was found that labour hours reduced as cumulative output increased, and it is expected that
this trend will continue until 64 fruit bowls have been manufactured. The total number of hours to complete the next two fruit
bowls was 41.04 hours. The labour and material costs to manufacture the first four fruit bowls, which have already been sold,
were as follows:
Direct materials: R1 360
Direct labour: R1 420
Additional information:
A gift shop owner saw these fruit bowls and has asked for a quotation for 12 to add to its range of products
Since the first four fruit bowls were manufactured, the price of material increased by 8%, and the cost of labour by
15%.
Comfy Limited paid the designer of the fruit bowl R1 600. They have committed to producing and selling only 64
of these fruit bowls which will be complete within the next few months.
Sundry materials amount to R1.50 per fruit bowl.
Other variable manufacturing overheads are allocated at R1.00 per direct labour hour.
Monthly fixed costs of the business amount to R15 200, of which 10% applies to the above order
Required:
a) Calculate the learning curve
b) Calculate the quotation price for the 12 fruit bowls if the business requires a profit margin of 25% on quotation
price. Note: round off ALL calculations to the nearest two decimal places.
c) Calculate the total time required to manufacture units 17 to 32
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