1 2 Direct manufacturing labor time for first boat 15,000 labor -hours 3 Directmanufacturing labor rate $ 40 per direct manufacturing labor-hour 4 Variable manufacturing overhead cost 25 per direct manufacturing labor-hour 5 Other manufacturing overhead 20% of direct manufacturing labor costs Tooling costs $ 280,000 Learning curve for manufacturing labor time per boat 90 % cumulative average time 8 9 "Tooling can be reused at no extra cost because all of its cost has been assigned to the first deployment boat 10 11 Using the formula (p. 359 ), for a 90 % learning curve , b = In 0.9 -0.105361 12 In 2 0.693147 - = -0.152004 1. Calculate predicted total costs of producing the six PT109s for the Navy . (Nautilus will keep the first Required deployment boat assembled , costed at $1,575,000 , as a demonstration model for potential customers .) 2. What is the dollar amount of the difference between (a) the predicted total costs for producing the six PT109s in requirement 1, and (b) the predicted total costs for producing the six PT109s , assuming that there is no learning curve for direct manufacturing labor ? That is, for (b) assume a linear function for units produced and direct manufacturing labor -hours . 10-37 Cost estimation , incremental unit -time learning model . Assume the same information for the Nautilus Company as in Problem 10-36 with one exception . This exception is that Nautilus uses a 90% incre - mental 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 .) 1. Prepare a prediction of the total costs for producing the six PT109s for the Navy . Required 2. If you solved requirement 1 of Problem 10-36, compare your cost prediction there with the one you made here. Why are the predictions different? How should Nautilus decide which model it should use? 10-38 Regression; choosing among models. Tilbert Toys (TT) makes the popular Floppin' Freddy Frog and Jumpin' Jill Junebug dolls in batches. TT has recently adopted activity-based costing. TT incurs setup costs for each batch of dolls that it produces. TT uses "number of setups" as the cost driver for setup costs. TT has just hired Bebe Williams, an accountant. Bebe thinks that "number of setup-hours" might be a better cost driver because the setup time for each product is different. Bebe collects the following data. Home Insert Page Layout Formulas Data Review View A B 1 Month Number of Setups Number of Setup Hours Setup Costs 300 ,84 $ 104,600 3 2 410 2,680 126,700 4 3 150 1,160 57,480 5 4 480 3,800 236,840 6 5 310 3,680 178,880 7 6 460 3,900 213,760 8 7 420 2,980 209,620 9 8 300 1,200 90,080 10 9 270 3,280 221,040