The Icelandic government is developing an energy complex in the country. For this project a certain number of special turbines are needed. The Icelandic government has contracted your company to manufacture the turbines. The first turbine manufactured for the first phase of the project is estimated to take 18,000 hrs to assemble. The Icelandic government wants to buy 5 turbines allowing you a 40 % profit margin per individual turbine. Your labor rate per hour is $ 32 and you have experienced a 75% learning rate for similar jobs in the past. The industrial engineer assigned to this project tells you that the slope of a 75% learning curve is -0.4150 and your accounting manager indicates that the $32 labor rate includes direct and indirect allocated cost and that your company calculates profit margins as a % of cost.

Calculate the following details for the first order of five turbines: (Note: use a piece of scrap paper and provide the answers only in the space below).

Tn = T1 (nb)

a. Average manufacturing time per unit

b. Average cost per unit

c. Average price per unit that the customer expects to pay as it benefits from the learning curve concept