Q2 (40 points): As a manager, you have been asked to estimate the total cost of...

Transcribed Image Text:

Q2 (40 points): As a manager, you have been asked to estimate the total cost of producing 15 engines in your company. Current engine blocks have an output of 135-hp per engine block. 7 years ago, a similar 180-hp engine block cost was 6150 KD. Besides that due to extreme competition in the industry, the cost of an engine block has decreased by 11% 3 times throughout this period. The total cost of engines consists of engine block cost, direct labor cost, and other labor-related costs. Pertinent data are as follows: Direct labor cost per hour 20 KD per hour Factory overhead Packing costs 130% of direct labor 70% of direct labor Maintenance costs Cost-capacity factor 10% of engine cost 0.75 Past experience has shown that an 85% learning curve applies to the labor required to produce these engines. Maintenance costs will be paid only once at the beginning of the second year. Use the estimated time to complete the 15th engine for the purpose of estimating the direct labor cost and multiply by the number of engines to find total cost. The time to complete the first engine has been estimated to be 85 hours. Instructions: Use 2 digits in your calculations and report the answers. Do not write commas or apostrophes. Do not write $ (dollar sign) or any other symbol, just write the number. a. (10 pts.) What is the total cost of the engines? b. (10 pts.). What is the direct labor cost? Q2 (40 points): As a manager, you have been asked to estimate the total cost of producing 15 engines in your company. Current engine blocks have an output of 135-hp per engine block. 7 years ago, a similar 180-hp engine block cost was 6150 KD. Besides that due to extreme competition in the industry, the cost of an engine block has decreased by 11% 3 times throughout this period. The total cost of engines consists of engine block cost, direct labor cost, and other labor-related costs. Pertinent data are as follows: Direct labor cost per hour 20 KD per hour Factory overhead Packing costs 130% of direct labor 70% of direct labor Maintenance costs Cost-capacity factor 10% of engine cost 0.75 Past experience has shown that an 85% learning curve applies to the labor required to produce these engines. Maintenance costs will be paid only once at the beginning of the second year. Use the estimated time to complete the 15th engine for the purpose of estimating the direct labor cost and multiply by the number of engines to find total cost. The time to complete the first engine has been estimated to be 85 hours. Instructions: Use 2 digits in your calculations and report the answers. Do not write commas or apostrophes. Do not write $ (dollar sign) or any other symbol, just write the number. a. (10 pts.) What is the total cost of the engines? b. (10 pts.). What is the direct labor cost?