The Nautilus 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 first of a new model (PT109) of deployment boats. The Navy is impressed with the PT109. It requests that Nautilus submit a proposal on the cost of producing another six PT109s. Nautilus reports the following cost information for the first PT109 assembled and uses a 90% cumulative average-time learning model as a basis for forecasting direct manufacturing labor-hours for the next six PT109s. (A 90% learning curve means b = -0.152004.) (Click the icon to view the cost information.) Read the requirements. Requirement 1. Calculate predicted total costs of producing the six PT109s for the Navy. (Nautilus will keep the first deployment boat assembled, costed at $1,410,000, as a demonstration model for potential customers.) Begin by determining the hours used to produce the six PT109s for the Navy. (Round intermediary and final answers to the nearest whole number.) The total cumulative time in labor-hours for seven PT109s is hours; therefore, the total time to produce six PT109s is hours. Data table Direct materials cost Direct manufacturing labor time for first boat Learning curve for manufacturing labor time per boat Direct manufacturing labor costs $ 206,000 per PT109 15,300 direct manufacturing labor-hours 90% cumulative average time $ Variable manufacturing overhead costs $ Other manufacturing overhead 38 per direct manufacturing labor-hour 22 per direct manufacturing labor-hour 15% of direct manufacturing labor costs Tooling costs $ 286,000 1 In 0.90 Using the formula for a 90% learning curve, b = In 2 -0.105361 0.693147 = -0.152004 s 2 Tooling can be reused at no extra cost because all of its cost has been assigned to the first deployment boat. Clear all Check answer Requirements 1. Calculate predicted total costs of producing the six PT109s for the Navy. (Nautilus will keep the first deployment boat assembled, costed at $1,410,000, as a demonstration model for potential customers.) 2. What is the dollar amount of the difference between (a) the predicted total costs for producing the six PT109s in requirement 1, and (b) the predicted total costs for producing the six PT109s, assuming that there is no learning curve for direct manufacturing labor? That is, for (b) assume a linear function for units produced and direct manufacturing labor-hours.