Explain how to solve the problem of the prime contractor

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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.

Question 1: The prime contractor has now approached URA and asked to submit a bid for the cost of producing another 20 guidance controls. Explain how to solve the problem.

Reference no: EM132588712

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