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Kanu Engineering has two manufacturing plants (Fratton Engineering and Milton Engineering). The Fratton Engineering plant has a more highly skilled workforce and operates in a

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Kanu Engineering has two manufacturing plants (Fratton Engineering and Milton Engineering). The Fratton Engineering plant has a more highly skilled workforce and operates in a higher cost location. Kanu Engineering has developed a new high technology milling machine and currently has orders for 20 machines (12 are to be produced in the Fratton plant and 8 in the Milton plant) It is anticipated that the learning curve will operate in the production of the new machines, an 80% cumulative-average learning curve in the Fratton plant and a 90% cumulative-average learning curve in the Milton plant. The following is the sales, production and cost data for the two plants ratton Engineering 1,000 Milton Engineering 1,000 Manufacturing hours for the first machine umulative-average learning curve Materials cost per machine (learning curve does not appl 12,000 12,000 anufacturing cost per hour (to w learning curve applies General overheads (recovered on total manufacturing cost, including materials cost) 50% 30% lling and distribution costs of sales price 60 of sales price machine Requirement (a)Determine the average total cost per machine at each plant. 14 Marks (b)Determine the average profit (or loss) per machine at each plant and the profit to sales %. 3 Marks (c)Briefly outline the situations where the learning curve generally applies. 8 Marks Total 25 Marks

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