Question
Harriman Industries manufactures engines for the aerospace industry. It has completed manufacturing the first unit of the new zx-9 engine design. Management believes that the
Harriman Industries manufactures engines for the aerospace industry. It has completed manufacturing the first unit of the new zx-9 engine design. Management believes that the 1000 labor hours required to complete this unit are reasonable and is prepared to go forward with the manufacture of additional units. An 80 percent cumulative average-time learning curve model for direct labor hours is assumed to be valid. Data on costs are as follows:
Direct materials: 10500
Direct labor: 30 per direct labor hour
Variable manufacturing overhead: 40 per direct labor
1. Set up a table with columns for cumulative numbers of units, cumulative average time per unit in hours, and the cumulative total time in hours. Complete the table for cumulative number of units for 1, 2, 4, 8, 16 and 32
2. What are the total variable costs of producing 1, 2, 4, 8, 16 and 32 units? What is the variable cost per unit for 1, 2, 4, 8,16 and 32 units? If required, round your answers to one decimal place. Use the rounded answers in the subsequent computations
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