Genve Dfense Systmes manufactures radar systems. It has just completed the manufacture of its first newly designed
Question:
Genève Défense Systèmes manufactures radar systems. It has just completed the manufacture of its first newly designed system, RS-32. It took 3000 direct manufacturing labour-hours (DMLH) to produce this one unit. Genève Défense Systèmes believes that a 90% cumulative average-time learning model for direct manufacturing labour-hours applies to RS-32. (A 90% learning curve implies q = -0.1520.) The variable costs of producing RS-32 are:
Direct materials costs.................................SFr 80 000 per RS-32
Direct manufacturing labour costs......................SFr 25 per DMLH
Variable manufacturing overhead costs................SFr 15 per DMLH
Required
Calculate the total variable costs of producing 2, 4 and 8 units.
Step by Step Answer:
Management and Cost Accounting
ISBN: 978-1405888202
4th edition
Authors: Alnoor Bhimani, Charles T. Horngren, Srikant M. Datar, George Foster