The Blue Seas Company, which is under contract to the U.S. Navy, assembles troop deployment boats....

 

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The Blue Seas Company, which is under contract to the U.S. Navy, assembles troop deployment boats. As part of its research program, it completes the assembly of the fir of a new model (PT109) of deployment boats. The Navy is impressed with the PT109. It requests that Blue Seas submit a proposal of the cost of producing another six PT109s. Blue Seas reports the following cost information for the first PT109 assembled and uses a 90% incremental unit-time learning model as a basis for forecasting direct manufacturing labor hours for the next six PT109s: Direct material Direct Labor for first boat Direct labor rate Variable manufacturing overhead Other manufacturing overhead Tooling costs* $201,000 15,700 hours $43 per hour $24 per DLH 15% of direct labor cost $281,000 *tooling can be reused for the other boats at no extra cost (this cost is absorbed by the first boat). Required: 1. 2. Calculate the predicted total costs of producing the next six PT109s for the Navy. (Blue Seas will keep the first protype boat as a demonstration model for other potential customers. (The total cost of this first boat is $1,533,900) What is the dollar amount of the difference between the predicted cost in #1 above and the cost of the six boats assuming no learning curve for direct labor? The Blue Seas Company, which is under contract to the U.S. Navy, assembles troop deployment boats. As part of its research program, it completes the assembly of the fir of a new model (PT109) of deployment boats. The Navy is impressed with the PT109. It requests that Blue Seas submit a proposal of the cost of producing another six PT109s. Blue Seas reports the following cost information for the first PT109 assembled and uses a 90% incremental unit-time learning model as a basis for forecasting direct manufacturing labor hours for the next six PT109s: Direct material Direct Labor for first boat Direct labor rate Variable manufacturing overhead Other manufacturing overhead Tooling costs* $201,000 15,700 hours $43 per hour $24 per DLH 15% of direct labor cost $281,000 *tooling can be reused for the other boats at no extra cost (this cost is absorbed by the first boat). Required: 1. 2. Calculate the predicted total costs of producing the next six PT109s for the Navy. (Blue Seas will keep the first protype boat as a demonstration model for other potential customers. (The total cost of this first boat is $1,533,900) What is the dollar amount of the difference between the predicted cost in #1 above and the cost of the six boats assuming no learning curve for direct labor?

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Answer Lets break down the calculations step by step 1 Predicted Total Costs of Producing the Next S... View the full answer