United Research Associates (URA) had received a contract to produce two units of a new cruise missile guidance control. The first unit took 5,000 hours to complete and cost $40,000 in materials and equipment usage. The second took 4,750 hours and cost $34,000 in materials and equipment usage. Labor cost is charged at $25 per hour. The company expects "learning" to occur relative to labor and also relative to the pricing of materials and equipment.

The prime contractor has now approached URA and asked to submit a bid for the cost of producing another 20 guidance controls. Help explain how to solve this problem.