Question

107. Young, Inc. has received a contract for 8 units of a new product. The contract is a cost-plus contract, with the total to be received equal to the total labour cost + 30%. Young found that the first unit of a new product required 90 hours to complete. The second unit was completed using only 76.5 hours. Young believes that the rate of learning that was observed will continue for all 8 units of the contract. The labour wage paid is $40/hour. The following factors are available for various rates of learning: 80% learning, b = -.3219; 85%, b = -.2345; 90%, b = -.1520; 95%, b = -.0740.

Required: (a) What will the total labour cost be for the contract? (b) What will be the total fee for the contract?

Answer 1

here solution is as follows

Here learning Curve, is 80% because to produces the first unit he tools he tools to hours and to produce and wait tools only 76. 5 hours there fore learning hour is a go- 76.5 13.5 hrs 90 et and it is mentioned learning ist and hance 13.5 hrs Saved So learning is 86% from ist, unit to and unit. (76.5 x 100 ) As given in the problem contract is for 8 units of new produ was continued upto Sunits os observed in Shere fore required labour cost is as follows Tq XN Th I amount 4th whit Tha time to produce T, = amount of time required to produce la nit be learning curve factor given in the problem. -0.2345 for 85%. = N = 8 units Tg -0.2345 *3.2345 T8 go X 0.614 7 55.267 hrs 55.267 ford & per hrs rate 55.867 hrs xf40 a) 9 Total labur = {2010.69 per unit x number of units zita $ 2210.69 X8_ = $17686 CS Scanned with CamScanner

bi Total contract fees Total labur cost + 30% of labber lost - 417686 + 30* $17686 E $17686 +95305.8 - $ 22991.8 learning is 8sy, Labur hour can be calculated as we know each time number og products produced will be doubled in The form of 1.2.4,8 8 is as follous. units total time averagefime 1 go go 2. 153 4 외 260.1 8 76.5(859. of 90) 65.025 (887.976.5) 55.47 (857. 06.025) 449.17 ay: Total time required to produce 8 units is 44a. 17 hre total labur cost = Total hour x rate/hr H12-17h-X$40 = 17686.8 by Total fee for contract - Total labur cost t 307. of labur cost =$77686:8 + 30_x$17686.8 = $ 22,992.84 CS Scanned with CamScanner

thank you !!!

if you help by solution please give thumb up.....