Answer Happy

As a manager have been asked to estimate the total cost of producing 15 engines in your company. Current engines have an output of 135-hp per engine. 7 years ago, a similar 180-hp engine cost was 6150 KD. Beside that due to extreme competition in the industry, the cost of an engine has decreased with 11% only for 3 intervals of time throughout this period. Total cost consists of engine cost, direct labor cost and other labor-related costs. Pertinent data are as follows: Direct labor cost per hour Factory overhead Packing costs Maintenance costs Cost-capacity factor 20 KD per hour 130% of direct labor 70% of direct labor 10% of engine cost 0.75 Past experience has shown that an 85% learning curve applies to the labor required producing these engines. Maintenance cost will be paid only once at the beginning of the second year. Use the estimated time to complete the 15th engine for the purpose of estimating the direct labor cost. The time to complete the first engine has been estimated to be 85 hours. Instructions: • Use 2 digits in your calculations and reporting the answers. • Do not write commas or apostrophes. • Do not write $ (dollar sign) or any other symbol, just write the number. 1. What is the total cost of the engine? 2. What is the total direct labor cost? 3. What is the total cost of the required production?