Using the cumulative average-time learning model

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Reference no: EM131258197

Addison Company manufactures components for space vehicles. It needs to forecast its direct-labor costs to use in making a competitive bid for 700 units of a certain component. The company’s experience reveals that an 80% learning curve (b=-.3219) is appropriate. Recently, Addison produced its first 100 units of these components in 8,000 labor hours. Labor is paid $20 per hour. Using the cumulative average-time learning model, compute the predicted direct-labor costs for a costs for a contract of the additional 700 units.

Reference no: EM131258197

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