The Pacific Boat 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 Pacific Boat submit a proposal on the cost of producing another six PT109s. Pacific Boat 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.)

A B 1 Direct material cost $ 199,000 2 Direct manufacturing labor time for first boat 14,700 labor-hours 3 Direct manufacturing labor rate $ 42 per direct manufacturing labor-hour 4 Variable manufacturing overhead cost $ 26 per direct manufacturing labor-hour 5 Other manufacturing overhead 20% of direct manufacturing labor costs 6 Tooling costs $ 279,000 7 Learning curve for manufacturing labor time per boat 90% cumulative average aTooling can be reused at no extra cost because all of its cost has been assigned to the first 8 deployment boat In 0.90 b Using the formula for a 90% learning curve, b = In 2 -0.105361 = -0.152004 0.693147 Requirement 1. Calculate predicted total costs of producing the six PT109s for the Navy. (Pacific Boat will keep the first deployment boat assembled, costed at $1,477,600, as a demonstration model for potential customers.) Begin by determining the hours used to produce the six PT109s for the Navy. (Round your answers to the nearest whole number.) hours; The total cumulative time in labor-hours for seven PT109s is therefore, the total time to produce six PT109s is hours. Now calculate the predicted total costs of producing the six PT109. (Round your answers to the nearest whole dollar.) Direct materials $ Direct manufacturing labor Variable manufacturing overhead Other manufacturing overhead $ Total costs Requirement 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. Begin by calculating the predicted total costs for producing the six PT109s, assuming that there is no learning curve for direct manufacturing labor. (Round your answers to the nearest whole dollar.) Direct materials Direct manufacturing labor Variable manufacturing overhead Other manufacturing overhead Total costs The difference between (a) requirement 1's predicted total costs and (b) predicted total costs with no learning curve is