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 three PT109s. Nautilus reports the following cost information for the first PT109 assembled and uses a 85% cumulative average-time learning model as a basis for forecasting direct manufacturing labor-hours for the next seven PT109s. (A 85% learning curve means b = 0.234465.) Direct material $ 100,000 Direct manufacturing labor time for first boat 10,000 labor-hours Direct manufacturing labor rate $ 30 per direct manufacturing labor-hour Variable manufacturing overhead cost $ 20 per direct manufacturing labor-hour Other manufacturing overhead 25% of direct labor costs manufacturing Tooling costsa $250,000 Learning curve for manufacturing labor time per boat 85% cumulative average timeb a Tooling can be reused at no extra cost because all of its cost has been assigned to the first deployment boat. b Using the formula: y = aXb where y=Cumulative average time per unit X= Cumulative number of units produced a = Time required to produce the first unit b =Factor used to calculate cumulative average time to produce units for a 85% learning curve, b = ln 0.85/ln 2 = 0.162519/0.693147= 0.234465 Required: (16%) 1 Calculate the cost of the first deployment boat assembled. 2 Calculate predicted total costs of producing the seven PT109s for the Navy. (Nautilus will keep the first deployment boat assembled as a demonstration model for potential customers.) 3 What is the dollar amount of the difference between (a) the predicted total costs for producing the three PT109s in requirement 2, and (b) the predicted total costs for producing the three PT109s, assuming that there is no learning curve for direct manufacturing labor?