Metal Craft is bidding on a new contract to produce a...
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Metal Craft is bidding on a new contract to produce a part in the landing gear for the Joint Strike Fighter. The lowest bidder will likely win the cost-reimbursable contract to make 600 units. When Chuck Taylor learned the unit cost of the prototype was $667 he was discouraged, thinking that the cost per unit needed to be less than $400 per unit. You told him that the unit cost is not linear but would likely decrease because of learning effects on labor hours. The direct material cost per unit is $250. The direct labor rate is $45.00 per labor hour. The indirect cost rate is $74.00 per labor hour. It took 3.5 hours to make the first unit. Using a learning rate of 85 percent, the total cost estimate to make 600 units is closest to $399,900 $205,768 $210.110 O $201.220
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