Question
Buccaneers Company has built a new yacht, to be sold to wealthy consumers. This yacht required 25,000 hours to complete. Buccaneers Company's Manager, Bruce Arians,
Buccaneers Company has built a new yacht, to be sold to wealthy consumers. This yacht required 25,000 hours to complete. Buccaneers Company's Manager, Bruce Arians, believes the cumulative average leaming model best reflects the company's production efficiency. Buccaneers Company's manufacturing costs for the second yacht are presented below.
Direct Labor- $160 per hour Variable Overhead- $125 per hour Materials- $125,000 per unit
Buccaneers Company just received a contract to make three more identical yachts (a total of four were madel The total labor cost for the second yacht was $3.200,000.
Bruce Arians is surprised that the new employees finished the third yacht in only 18.465 hours
What is the total cost of building the 4th yacht assuming the employces keep following the learning curve under the cumulative average model?
$5,122.475 $5,060.000 $5,497,475 $4,685,000
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