Satelite Problem

Topics: Costs, Variable cost, Marginal cost Pages: 2 (506 words) Published: November 3, 2012
How many labor hours should the eighth satellite require?
100,000 labor hours x.512 = 512,000 labor hours for the 8th satellites  
A. How many labor hours for the whole project of eight satellites?  100,000 labor hours for per unit x 5.346 = 534,600 total labor hours for the whole project of 8 satellites  
B. What should NSCD estimate as the total cost for this project? 534,600 labor hours x NOK 300 = 160,380,000
NOK 12,000,000 R&D + NOK 6,000,000 = 18,000,000
160,380,000 + 18,000,000 = 178,380,000
178,380,000 x 25% = 44,595,000
160,380,000 + 44,595,000 = 222,975,000

I would ask for NOK 222,975,000 for the project. This would include total cost of NOK 178,380,000 plus the desired 25% profit on total costs for all projects.

C. Midway through the project your design and production people realize that a 75% improvement curve is more appropriate. What impact does this have on the project? 80% improvement curve = 100,000 labor hours for per unit x 5.346 = 534,600 total labor hours for the whole project of 8 satellites

75% improvement curve = 100,000 labor hours for per unit x 4.802 = 480,200 total labor hours for the whole project of 8 satellites

534,600-480,200 = 54,400x300= NOK 16,320,000 total cost saving for the project

D. Near the end of the project Deutsch Telefon AG has requested a cost estimate for four satellites identical to those you have already produced. What price will you quote them? Justify your answer.

100,000 labor hours for per unit x 6.315 = 631,500 total labor hours for the whole project of 12 satellites

100,000 labor hours for per unit x 4.802 = 480,200 total labor hours for the whole project of 8 satellites

631,500-480,200=151,300 x 300 = 45,390,000 in additional labor cost of 4 units

3,000,000 for material (for 4 more units)

45,390,000+3,000,000= 48,390,000

48,390,000 x 25% = 12,097,500

I would quote Deutsch Telefon AG NOK...
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