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Part 1

Global Defense

manufactures radar systems. It has just completed the manufacture of its first newly designed system, RS-32. Manufacturing data for the RS-32 follow:

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Data table

Direct material cost	$89,000	per unit of RS-32
Direct manufacturing labor time for first unit	3,700	direct manufacturing labor-hours
Learning curve for manufacturing labor time per radar system	85%	cumulative average time
Direct manufacturing labor cost	$23	per direct manufacturing labor-hour
Variable manufacturing overhead cost	$11	per direct manufacturing labor-hour

"Requirement

Calculate the total variable costs of producing 2, 4, and 8 units.

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Part 1

Begin by calculating the cumulative total time in labor-hours using the cumulative average-time learning model. (Round the cumulative average time per unit to the nearest whole number.)

Cumulative number of	Cumulative average time	Cumulative total time:
units	per unit: Labor-hours	Labor-hours
2		3,145			6,290
4		2,673			10,692
8		2,272			18,176

Part 2

Now calculate the total variable costs of producing 2, 4, and 8 units.

	Variable costs of producing
	2 Units	4 Units	8 Units
Direct materials
Direct manufacturing labor
Variable manufacturing overhead
Total variable costs