The phoenix corporation makes giant inflated figures for parades etc. Seven rece

Question

The phoenix corporation makes giant inflated figures for parades etc. Seven recent orders for humongous lighted turkeys necessitated the development of a prototype that took 150 hours. Direct labor hours were affected by a 87% learning curve and cost $41/DLH. Variable costs were 65% of direct labor costs. Compute the cost of producing the next 7 for sale to parade committees across the country using the cumulative average method. DM = $30 per unit.

Unit # Cumulative Average/DLH/Unit Total DLH

1 150 DLH _______

2 _________ ________

4 __________ _________

8 _________ _________

Less DLH on unit #1 _________

Total DLH for the 7 unit sold ____________

Explanation / Answer

Cost of producing the next 7 unit for sale to parade committees across the country using the cumulative average method is $43,519.53

Output Cumulative Average Time( Hours) Total time (Hours) 1 150 150 2 150*0.87=130.5 130.5*2=261 4 130.5*0.87= 113.535 113.535*4=454.14 8 113.535*0.87= 98.77545 98.77545*8=790.2036 Total time taken(hours) for 8 units                          790.2036 Less: DLH on unit 1                            150.0000 Total DLH for the 7 unit sold                              640.20

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