United Research Associates (URA) had received a contract to produce two units of a new cruise missile guidance control. The first unit took 5,000 hours to complete and cost $40,000 in materials and equipment usage. The second took 4,750 hours and cost $34,000 in materials and equipment usage. Labor cost is charged at $25 per hour. The company expects “learning” to occur relative to labor and also relative to the pricing of materials and equipment.
The prime contractor has now approached URA and asked to submit a bid for the cost of producing another 20 guidance controls. Use Exhibit 6.4 and Exhibit 6.5.
a. What will the last unit cost to build? (Round your answer to the nearest dollar amount.)
Cost of last unit $
b. What will be the average time for the 20 missile guidance controls? (Round your answer to the nearest whole number.)
Average time hours
c. What will the average cost be for guidance control for the 20 in the contract? (Round your answer to the nearest dollar amount.)
Average cost $