During its predictable life, 16,000 units of the product will be

Performance management questionAn organization is developing a new product. During its predictable life, 16,000 units of the product will be sold for $82 per unit. Production will be in batches of 1,000 units throughout the life of the product. The direct labor cost is expected to reduce due to the effects of learning for the first eight batches produced. Thereafter, the direct labor cost will remain constant at the same cost per batch as the 8th batch. The direct labor cost of the first batch of 1,000 units is expected to be $35,000 and a 90% learning effect is expected to occur. The direct material and other non-labor related variable costs will be $40 per unit throughout the life of the product. There are no fixed costs that are specific to the product.Required:(i) Calculate the expected direct labor cost of the 8th batch. (4 marks)Calculate the rate of learning required to achieve a lifetime product contribution of$400,000 assuming a constant rate of learning applies throughout the productâs life. (4 marks)

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