World Defense manufactures radar systems. It has just completed the manufacture of its first newly...
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World Defense manufactures radar systems. It has just completed the manufacture of its first newly designed system, RS-32. Manufacturing data for the RS-32 follow: (Click icon to view data) Requirement Calculate the total variable costs of producing 2, 4, and 8 units. Begin by calculating the total cumulative time in labor-hours. (Round the cumulative average time per unit to the nearest whole number.) Cumulative average time Number of Cumulative total time: units per unit: Labor-hours Labor-hours 3,145 6,290 2 2,673 10,692 4 2,272 18,176 Now calculate the total variable costs of producing 2, 4, and 8 units. Variable costs of producing 4 Units 8 Units 2 Units Direct materials Direct manufacturing labor Variable manufacturing overhead Total variable costs $89,000 per unit of RS-32 3,700 direct manufacturing labor-hours Direct material cost Direct manufacturing labor time for first unit Learning curve for manufacturing labor time per radar system 85% cumulative average timea $20 per direct manufacturing labor-hour $10 per direct manufacturing labor-hour Direct manufacturing labor cost Variable manufacturing overhead cost In 0.85 - 0.162519 aUsing the formula for an 85% learning curve, b = In 2 = - 0.234465 0.693147
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