The Blue Seas Company, which is under contract to the U.S. Navy, assembles troop deployment boats. As part of its research program, it completes the assembly of the fir of a new model (PT109) of deployment boats. The Navy is impressed with the PT109. It requests that Blue Seas submit a proposal of the cost of producing another six PT109s. Blue Seas reports the following cost information for the first PT109 assembled and uses a 90% incremental unit-time learning model as a basis for forecasting direct manufacturing labor hours for the next six PT109s: Direct material Direct Labor for first boat Direct labor rate Variable manufacturing overhead Other manufacturing overhead Tooling costs* $201,000 15,700 hours $43 per hour $24 per DLH 15% of direct labor cost $281,000 *tooling can be reused for the other boats at no extra cost (this cost is absorbed by the first boat). Required: 1. 2. Calculate the predicted total costs of producing the next six PT109s for the Navy. (Blue Seas will keep the first protype boat as a demonstration model for other potential customers. (The total cost of this first boat is $1,533,900) What is the dollar amount of the difference between the predicted cost in #1 above and the cost of the six boats assuming no learning curve for direct labor?