Lambda Computer Products competed for and won a contract to produce two prototyp
ID: 2422087 • Letter: L
Question
Lambda Computer Products competed for and won a contract to produce two prototype units of a new type of computer that is based on laser optics rather than on electronic binary bits.
The first unit produced by Lambda took 5,000 hours to produce and required $250,000 worth of material, equipment usage, and supplies. The second unit took 3,000 hours and used $175,000 worth of materials, equipment usage, and supplies. Labor is $30 per hour. Use Exhibit 6.5. (is the improvment Curves: Table of Cumulative Values)
Lambda was asked to present a bid for 10 additional units as soon as the second unit was completed. Production would start immediately. What would this bid be?
Lambda Computer Products competed for and won a contract to produce two prototype units of a new type of computer that is based on laser optics rather than on electronic binary bits.
The first unit produced by Lambda took 5,000 hours to produce and required $250,000 worth of material, equipment usage, and supplies. The second unit took 3,000 hours and used $175,000 worth of materials, equipment usage, and supplies. Labor is $30 per hour. Use Exhibit 6.5. (is the improvment Curves: Table of Cumulative Values)
Explanation / Answer
a. Labor: LR = 3000/5000 = 60% From Exhibit 6.5 12 units 4.144 -2 units 1.6 2.544 Therefore, Labor cost for 10 more units = 5,000(2.544)(30) = $381,600 Material: LR = 175000/250000 = 70% From Exhibit 6.5 12 units 5.501 -2 units 1.7 3.801 Therefore, Material cost for 10 more units = 250,000(3.801) = $950,250 Total Cost is $381600 + $950250 = $1,331,850
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