Question

Marshall Co. produced a pilot run of fifty units of a recently developed piston used in one of its products. Marshall expected to produce and sell 1,950 units annually. The pilot run required an average of 55 direct labor hours per piston for 50 pistons. Marshall experienced an eighty percent learning curve on the direct labor hours needed to produce new pistons. Past experience indicated that learning tends to cease by the time 800 pistons are produced. Marshall's manufacturing costs for pistons are presented below Direct labor Variable overhead Fixed overhead Materials $14.00 per direct labor hour 12.00 per direct labor hour 20.00 per direct labor hour 5.00 per unit Marshall received a quote of $9 per unit from Kytel Machine Co. for the additional 1,900 needed pistons. Marshall frequently subcontracts this type of work and has always been satisfied with the quality of the units produced by Kytel. If the pistons are manufactured by Marshall Co, the total direct labor hours for the first 800 pistons (including the pilot run) produced is calculated to be (round to two digits after the decimal point) 92.04 176.95 80.22 67.11 173.69

Answer 1

Every time a units double, the time to produce Reduce time to 80%

Units	Hours	Total
50	0.55	27.50
100	0.44	44.00
200	0.352	70.40
400	0.2816	112.64
800	0.22528	180.22

Answer is 180.22