The SVP BoatSVP 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 SVP BoatSVP Boat submit a proposal on the cost of producing another six PT109s. SVP BoatSVP Boat reports the following cost information for the first PT109 assembled and uses a 9090% cumulative average-time learning model as a basis for forecasting direct manufacturing labor-hours for the next six PT109s. (A 9090% learning curve means b = negative 0.1520040.152004.)

1.	Calculate predicted total costs of producing the six PT109s for the Navy. (SVP BoatSVP Boat will keep the first deployment boat assembled, costed at $ 1,322 ,800. 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.

B 1 Direct material cost $ 198,000 2 Direct manufacturing labor time for first boat at 14.600 labor-hours 3 Direct manufacturing labor rate $ 36 per direct manufacturing labor-hour 4 Variable manufacturing overhead cost $ 22 per direct manufacturing labor-hour 5 Other manufacturing overhead 15% of direct manufacturing labor costs 6 Tooling costs $ 278,000 | 7 Learning curve for manufacturing labor time per boat 90% cumulative average Tooling can be reused at no extra cost because all of its cost has been assigned to the first 8 deployment boat a Tooling can be reused at no extra cost because all of its cost has been assigned to the first deployment boat. In 0.90 -0.105361 Using the formula for a 90% learning curve, b = -102 -0.693197 = -0.152004