During 20x1, Advanced Systems Introduced Complex Oil Well Monitoring Equipment

Essay

During 20x1, Advanced Systems introduced complex oil well monitoring equipment and produced 100 units in anticipation of selling to the major oil-producing companies. The first unit produced cost $125,000, and production costs are subject to a 90% learning curve. Note: ln(90%)/ ln(2)= -0.152.
During 20x1, the company sold 20 units and during 20x2, the company sold 40 units. Each unit sells for $100,000. If costs are assigned to cost of goods sold based on the average expected cost for all units in the 2001 production run, what is the company's gross profit during 20x2?