Question

The Pacific Boat Company, which is under contract to the U.S. Navy, assembles troop deployment boats. As part of its research program, it completes the assem of the first of a new model (PT109) of deployment boats. The Navy is impressed with the PT109. It requests that Pacific Boat submit a proposal on the cost of producing another six PT 109s Pacific Boat reports the following cost information for the first PT 109 assembled. Pacific Boat uses a 90% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours in its assembling operations. A 90% learning curve means b =-0.152004. (Click the icon to view the cost information.) Read the requirements Requirement 1. Prepare a prediction of the total costs for producing the six PT109s for the Navy Begin by calculating the cumulative total time in labor-hours. (Round the individual unit time for Xth unit to the nearest whole number.) Number of Individual unit time for Cumulative total time units Xth unit: Labor-hours Data Table $201,000 Direct material Direct manufacturing labor time for first boat Direct manufacturing labor rate Variable manufacturing overhead cost Other manufacturing overhead Tooling costsa Learning curve for manufacturing labor time per boat 15,700 labor-hours $45 per direct manufacturing labor-hour $21 per direct manufacturing labor-hour costs 20% of direct manufacturing labor $281,000 90% incremental unit-timeb a Tooling can be reused at no extra cost because all of its cost has been assigned to the first deployment boat. In 0.90 0.105361 b using the formula for a 90% learning curve. In 2 0.693147-0.152004

Answer 1

The usuall learning Cuve model iS: Average time per part for x parts a = Time required for first part (15700 labour hours) x = Cumulative number of parts bLearning coeficient and is equal to-0.152 (learning rate 90%) Now you know on 1st product time taken was 15700 labour hours, so on 2nd unit it will be 90% of 15700 ie. 14130 hours and on 4th unit it will be 90% of 14130 i.e. 12717 hours and so on. So Now we got an order of six boats, so total boat we will produce will be seven (including one already produced See by above formula we get average time required for units, Say we want average time for 6 units thus the formula will be: Y 1570060.152 Y-10277 So total time for 6 units is 61662 (10277 6) hours Again we will calculate in the same way for 7 units And that comes to 10019 hours, which is average for 7 units. Now total hours for 7 units is 70133 hours. So additional hours required for 7th units will be 70133-61662 i.e. 8471 hours.

Done by forumla Units AVG Labour hours p.u. (B) Addittional Labour hours P.u. (C) Cum Labour Hours [(A) (B)] 15700 12560.0606 11596 11012 10597 10277 10019 15700 14130.0303 13285.47914 12717.05454 12292.95273 11956.95686 11680.0513 15700 28260.0606 39856 50868 61465 71742 81760 4 7 1 Answer for Requirement one will be Third and Fourth Column 1 Prediction of total cost: Total Hours required for 6 units-70133-15700 l.е.54433 hours Direct Material 201000*6 1206000 Direct Material Cost 45 54433 2449485 Variable Overhead 21*54433 1143093 Other Overhead-20% of 2449485-489897 Total Cost 5288475

1 Prediction of total cost: Total Hours required for 6 units-70133-15700 l.е.54433 hours Direct Material-201000*6-1206000 Direct Material Cost 45 *54433 2449485 Variable Overhead 21 54433 1143093 Other Overhead = 20% of 2449485 489897 Total Cost = 5288475 Arijit Singh 2 In this cost il 5288475, which is less than 6160500, so this method is more cost efficient.