Reference no: EM13859763

A defense contractor is bidding on a military contract for 100 radar units. The contractor employs 30 machine operators who work 165 hours a month each. The first radar unit required 1145 operator-hours, and the learning curve for this type of work is known to be 75 percent. It takes a month to order and receive raw material components, which cost $500 per radar unit. The material is then paid for in the month it is received. Fixed costs include a month to tool up, which costs $10,000, and then $5000 per month for every month of production. Direct labor and variable overhead are $8 per hour. The contractor can deliver only completed units and is paid the following month. Profit is set at 10 percent of the bid price. Find the bid price, derive the production schedule, and calculate the cash flow schedule.