Shell, Inc., manufactures complex units for submarines. Fabricating these units requires a high degree of technical skill. However, employees have an opportunity to learn how to produce the units more effectively. In estimating direct labor-hours, a 70 percent learning curve can be used. Completing one prototype unit required 1,200 direct labor-hours at a cost of $18,000.

Required:

a. Determine the cumulative average worker-hours per unit for a total of two units, four units, and eight units.

b. Estimate direct labor cost for an order of seven additional units, after completing one unit.