a contractor had produced the first unit of laster targeting device at a cost of

Question

a contractor had produced the first unit of laster targeting device at a cost of $45k. Historically, their lerning curve has range from 88%-92%. The contractor's manufacturing overhead of 175% is based on business that has already been booked for the coming year that will fully employ their facility and workforce. The buy quantity for the coming year has been by the multiyear agreement. Which would be the best element to consider in a sensitivity analysis?

a. overhead rate
b. first unit cost
c. buy quantity
d. learning curve slope

Explanation / Answer

a contractor had produced the first unit of laster targeting device at a cost of $45k. Historically, their lerning curve has range from 88%-92%. The contractor's manufacturing overhead of 175% is based on business that has already been booked for the coming year that will fully employ their facility and workforce. The buy quantity for the coming year has been by the multiyear agreement. Which would be the best element to consider in a sensitivity analysis?

a. overhead rate
b. first unit cost
c. buy quantity
d. learning curve slope

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