Question

From the last question.... You are an experienced machinist with a small tool shop. You have been asked to submit a bid to produce twelve (12) special clamps for a new die that is under construction. You estimate that the material costs (metal and fasteners) for each clamp are $150.00. You also estimate that 9.49 labor hours are needed to produce the first clamp. The value of your labor is $50/hour.

Your potential customer is receptive to your bid from the previous question, but is hesitant to award you the order because the average price per clamp that you bid is 5% higher than his target price. You respond to the customer that if they would increase their order from 12 clamps to x clamps, you could beat his target price. Find x. What is your new AVERAGE PRICE PER CLAMP ?

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You are an experienced machinist with a small tool shop. You have been asked to submit a bid to produce 12 special clamps for a new die that is under construction. You estimate that the material costs (metal and fasteners) for each clamp are $150.00. You also estimate that 9.49 labor hours are needed to produce the first clamp. The value of your labor is $50/hour.

From similar orders in the past, you estimate that there is a 90% learning curve for this type of work. Using this information, what is the lowest total bid you should submit if you charge a 25% markup on material and you wish to recoup your labor costs? (Hint: set up formulas in Excel - this is a long problem).

Round your answer to 2 decimal places and DO NOT include the $ sign or a comma. For example, answer 4567.89 and NOT $4,567.89

Expert Answer

Time for 1st unit = 9.49 hours

Learning curve = 90%

Total Time for nth unit = Time for 1st unit*Total factor for 90% Learning curve

Total time for 12 units = 9.49*9.374 = 88.96 hours

Labor cost for 12 units = Total time*Labor rate = 88.96*50 = 4447.96 $

Material cost per unit = 150 $

Material cost for 12 units = 150*12 = 1800 $

Mark up of 25% on Material cost increases Total Material cost to = 1800*(1+25%) = 2250 $

Bidding price = Labor cost + Material cost post mark up = 4447.96 + 2250 = 6697.96

Ans = 6697.96

Answer 1

Time for 1st unit = 9.49 hours

Learning curve = 90%

Total Time for nth unit = Time for 1st unit*Total factor for 90% Learning curve

Total time for 12 units = 9.49*9.374 = 88.96 hours

Labor cost for 12 units = Total time*Labor rate = 88.96*50 = 4447.96 $

Material cost per unit = 150 $

Material cost for 12 units = 150*12 = 1800 $

Mark up of 25% on Material cost increases Total Material cost to = 1800*(1+25%) = 2250 $

Bidding price = Labor cost + Material cost post mark up = 4447.96 + 2250 = 6697.96

Ans = 6697.96