Question
The following data apply to questions 8 and 9. Sigma Company recently completed and sold an order of 50 units having the following costs:
The following data apply to questions 8 and 9. Sigma Company recently completed and sold an order of 50 units having the following costs: Direct materials $ 1,500 Direct labour (1,000 hours @ $8.50) 8,500 Variable overhead (1,000 hours @ $4.00)! 4,000 Fixed overhead 1,400 $15,400 'Allocated on the basis of direct labour hours. Allocated at the rate of 10% of variable cost. The company has now been requested to prepare a bid for 150 units of the same product. 8. If an 80 percent learning curve is applicable, Sigma's total cost on this order would be estimated at a. $38,500. b. $37,950. C. $31,790. d. $26,400. 9. If Sigma had experienced a 70 percent learning curve, the bid for the 150 units would a. b. C. d. show a 30 percent reduction in the total direct labour hours required with no learning curve. include 1,404 total direct labour hours at $8.50 per hour. be 10 percent lower than the total bid at an 80 percent learning curve. include 6.40 direct labour hours per unit at $8.50 per hour. 10. Common problems encountered in collecting data for cost estimation include all but which of the following: a. missing data b. C. d. changes in technology lack of observing extreme values distortions resulting from inflation
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