Hybrid Cars A car manufacturer started the production of a new hybrid car. The operational costs for the first 64 cars are as follows:

Required:
1. What are the total operational cost of the first 100 cars produced?.
2. Car 32 is a special car and needs additional features. For an exact cost specification, we need to know the operational costs for Car 32. What are the operational costs for the production of Car 32?
3. The company just received an order for the delivery of cars 33–64 (so a total number of 32 cars) from a government agency. The variable overhead costs are €20 000 per car and the fixed overhead costs are €250 000. The company wants to earn a margin of 12% of the sales. The government agency is willing to pay a fixed amount of €3 000 000 for the whole order of 32 cars. Given the learning rate, the overhead costs and the required profit margin, should the company agree to the listed price? Give your calculations.
A small part of the car is sepearately produced. It is also new and follows a similar learning curve as the full car. Using regression on transformed CumAvCost and production volume data (to natural logarithmic scales), management accountants found the following regression results:

4. What is the total operational production costs of the first 100 parts?
5. What is the learning ratio for these parts?

Transcribed Image Text:

Cumulative average production costs Number of cars produced Cumulative average cost 1248 80000 76000 4 72200 68590 16 65161 32 61902 64 58807