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2: Cost Estimation (6 marks) Back in 2005 your company had a contact to produce 7 rock crushing machines and you have been asked to
2: Cost Estimation (6 marks) Back in 2005 your company had a contact to produce 7 rock crushing machines and you have been asked to estimate the cost of manufacturing 10 crushers this year. The cost of materials in 2005 was $87,500 per crusher when the index value for steel was 132. The base year for the index is 2000. The shop foreman's estimate of labour required to manufacture the first crusher is 980 person-hours. a) Using a steel cost index value estimate of 175 for 2015 calculate the estimate cost of materials for the new crushers. Round your answer to two decimal places. b) Assuming a loaded labour rate of $120 per hour, a 89% learning curve and using the cost of the 5"crusher as the standard time for estimating the average time, calculate the average labour cost per crusher. Round your answer to two decimal places. c) What is your estimate for the total cost to produce the 10 new crushers? Round your answer to the nearest $50
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