You are hired by a prefabricated buildings manufacturer and your first job is to
ID: 1091185 • Letter: Y
Question
You are hired by a prefabricated buildings manufacturer and your first job is to calculate the cost of 100 prefabricated structures. Each structure has 1,200 square feet of floor space and 8 foot ceilings. Historical records show that 70 structures with 900 square feet of floor space and 8 foot ceilings were produced in 1999.Then the materials cost for each structure was $20,000 and the cost capacity factor is 0.7. Cost index values for 1999 and 2011 are 250 and 410 respectively. The estimated manufacturing cost for the first 1,000 square foot structure is $25,000. Use a learning curve of 90% and use the cost of the 50th structure as your standard time for estimating manufacturing cost. Estimate the total material cost and the total manufacturing cost (Hint: the total cost is the sum of the two costs) for the 100 prefabricated structures.
Explanation / Answer
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You are hired by a prefabricated buildings manufacturer and your first job is to calculate the cost of 100 prefabricated structures. Each structure has 1,000 square feet of floor space and 8 foot ceilings. Historical records show that 70 structures with 800 square feet of floor space and 8 foot ceilings were produced in 1999.Then the materials cost for each structure was $25,000 and the cost capacity factor is 0.65. Cost index values for 1999 and 2011 are 200 and 289 respectively. The estimated manufacturing cost for the first 1,000 square foot structure is $12,000. Use a learning curve of 88% and use the cost of the 50th structure as your standard time for estimating manufacturing cost. Estimate the total material cost and the total manufacturing cost (Hint: the total cost is the sum of the two costs) for the 100 prefabricated structures.
Answer
Material Costs: I1999 = 200 I2006 = 289
X = 0.65 S1999 = 800
S2006 = 1000
C1999 = $25,000 289 1000
C2006 = $25,000 200 800
Manufacturing Costs: 0.65 s = 0.88 = $41,764
K = $12,000 Z50 = $12,000 (50)
log(0.88)/log(2) = $5,832
Total Cost = ($41,764 + $5,832)(100) = $4,759,600
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