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Eagle Airplane Company has built a new model jet aircraft, which it intends to sell to high net worth clients. This aircraft required 20.000 hours
Eagle Airplane Company has built a new model jet aircraft, which it intends to sell to high net worth clients. This aircraft required 20.000 hours to complete. Eagle believes a cumulative average learning model best reflects the company's production efficiency. Eagle's manufacturing costs for the second aircraft are presented below. Direct labor $ Variable overhead Fixed overhead 140,00 per direct labor hour 120.00 per direct labor hour 200000.00 per unit 90000.00 per unit Materials Eagle just received a contract to make three more identical aircraft (a total of four were made). The total labor cost for the second unit was $2,240,000. Management is surprised that the new employees finished the third aircraft in only 15,000 hours. Now they are curious to know what will be the total cost of building the 4th aircraft assuming the employees keep following the learning curve under the cumulative average model? $3,878,000 $3,228,790 $4,660,600 52.957,185
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