As a manager have been asked to estimate the total cost of producing 15 engines in...

 

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As a manager have been asked to estimate the total cost of producing 15 engines in your company. Current engines have an output of 135-hp per engine. 7 years ago, a similar 180-hp engine cost was 6155 KD. Beside that due to extreme competition in the industry, the cost of an engine has decreased with 10% only for 3 intervals of time throughout this period. Total cost consists of engine cost, direct labor cost and other labor-related costs. Pertinent data are as follows: Direct labor cost per 20 KD per hour hour Factory overhead 130% of direct labor Packing costs 70% of direct labor Maintenance costs 10% of engine cost Cost-capacity factor 0.75 Past experience has shown that an 85% learning curve applies to the labor required producing these engines. Maintenance cost will be paid only once at the beginning of the second year. Use the estimated time to complete the 15th engine for the purpose of estimating the direct labor cost. The time to complete the first engine has been estimated to be 85 hours. 1. What is the total cost of the engine? 2. What is the total direct labor cost? 3. What is the total cost of the required production? As a manager have been asked to estimate the total cost of producing 15 engines in your company. Current engines have an output of 135-hp per engine. 7 years ago, a similar 180-hp engine cost was 6155 KD. Beside that due to extreme competition in the industry, the cost of an engine has decreased with 10% only for 3 intervals of time throughout this period. Total cost consists of engine cost, direct labor cost and other labor-related costs. Pertinent data are as follows: Direct labor cost per 20 KD per hour hour Factory overhead 130% of direct labor Packing costs 70% of direct labor Maintenance costs 10% of engine cost Cost-capacity factor 0.75 Past experience has shown that an 85% learning curve applies to the labor required producing these engines. Maintenance cost will be paid only once at the beginning of the second year. Use the estimated time to complete the 15th engine for the purpose of estimating the direct labor cost. The time to complete the first engine has been estimated to be 85 hours. 1. What is the total cost of the engine? 2. What is the total direct labor cost? 3. What is the total cost of the required production?

Answer rating: 100% (QA)

working note Engine Cost 6155 x 90 55395 Foe is engines 55395 X15 830925 Total Direct ... View the full answer