Question

Lambda Computer Products competed for and won a contract to produce two prototype units of a new type of computer that is based on laser optics rather than on electronic binary bits. The first unit produced by Lambda took 5,000 hours to produce and required $250,000 worth of material, equipment usage, and supplies. The second unit took 3,750 hours and used $212,500 worth of materials, equipment usage, and supplies. Labor is $30 per hour. Use Exhibit 6.5. a. Lambda was asked to present a bid for 10 additional units as soon as the second unit was completed. Production would start immediately. What would this bid be? Cost for 10 more units

Answer 1

TOTAL LABOUR HOURS AND MATERIAL COST REQUIRED FOR FIRST TWO UNITS ARE SHOWN BELOW
UNIT	HOURS	COST
1	5,000	2,50,000
2	3,750	2,00,000
DETRERMINE THE AMOUNT OF LC
INITIALLY DETERMINE THE LEARNING RATE FOR 1-2 UNITS
LEARNING RATE	3750/5000*100	75%
MATERRIAL AND EQUIPMENT USAGE RATE	200000/250000	80%
TWO UNITS ALREADY HAS BEEN ALREADY PRODUCED HENCE TOTAL UNITS = 12 UNITS
USING CUMILATIVE VALUES WE CAN DETERMINE THE CUMILATIVE IMPROVEMENT FACTORS
					AMOUNT ($)
WORK HOURS	3750*5.589( 75% AND 10 UNITS) *$30 PER HOUR	6,28,762.50
MATERIAL AND EQUIPMENT	200000*6.315(80% AND 10 UNITS)	12,63,000.00
TOTAL ACCUMULATED COST FOR 10 UNITS	18,91,762.50