How many labor hours should the eighth satellite require

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Reference no: EM1391577

Norwegian Satellite Development Company (NSDC). NSDC is responding to a solicitation to produce eight satellites to support a worldwide telephone system (for Alaska Telecom, Inc.) that allows individuals to use a single, portable telephone in any location on earth to call in and out. NSDC will develop and produce the eight units. NSDC has estimated that the R&D costs will be NOK (Norwegian Krone) 12,000,000. Material costs are expected to be NOK 6,000,000. They have estimated the design and production of the first satellite will require 100,000 labor hours and an 80 percent improvement curve is expected. Skilled labor cost is NOK 300 per hour. NSDC desired profit for all projects is 25 percent of total costs. Assume in the estimated amounts above include all direct overheads for Labor, Material, and Research and Development (R&D) and G&A cost. Please answer the following questions:

a. How many labor hours should the eighth satellite require?

b. How many labor hours for the whole project of eight satellites?

c. What price would you propose for the project?

d. The contract was awarded to Norwegian Satellite Development Company, Contract Price NOK 222,975,000, Firm Fixed Price. Midway through the project your design and production people realize that a 75 percent improvement curve is more appropriate. What impact does this have on the project labor hours and cost and what profit amount would you estimate for this contract?

Reference no: EM1391577

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