Question
Can someone help with this problem please The objective of this exercise is to prepare an estimate for the construction of 12 training sites for
Can someone help with this problem please
The objective of this exercise is to prepare an estimate for the construction of 12 training sites for the government. When the specifications were released, the government also released the cost details for building the prototype training site. Shown below are the costs for direct materials, direct labor, and variable manufacturing overhead. Additionally, other manufacturing overhead costs were calculated as 10% of the sum of the previous three categories of costs. The $240,000 equipment purchased by the government will be made available to the selected contractor at no cost.
Direct materials $ 600,000
Direct labor (8,000 hours @ $100) 800,000
Variable manufacturing overhead (8,000 hours @ $25) 200,000
Other manufacturing overhead ($1,600,000 @ 10%) 160,000
Purchase of reusable equipment 240,000
Total $ 2,000,000
The 8,000 direct labor hours expended on the construction of the prototype is not applicable to your company. In fact, your highly skilled labor force has constructed 10 earlier versions of the training site as shown below. When preparing your estimate, assume the learning rate for the first 10 versions is applicable to the next 12 areas to be built.
Unit Number | Required Hours | Unit Number | Required Hours |
1 | 7,800 | 6 | 3,850 |
2 | 6,000 | 7 | 3,600 |
3 | 5,000 | 8 | 3,425 |
4 | 4,500 | 9 | 3,275 |
5 | 4,125 | 10 | 3,150 |
Use a learning curve model based on a) the individual unit time and b) the cumulative average time. For the individual unit time model, plot the number of labor hours against the number of training sites being constructed. For the cumulative average time model, plot the cumulative average number of hours against the number of training sites being constructed. The objective is to prepare two estimates, one based on the individual unit time model and one based on the cumulative average time model. Briefly discuss the reason for the differences in your results
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