Problem
Johnson Industries received a contract to develop and produce four high-intensity long-distance receiver/transmitters for cellular telephones. The first took 2,600 labor hours and $44,000 worth of purchased and manufactured parts; the second took 2,110 labor hours and $40,040 in parts; the third took 1,890 labor hours and $37,840 in parts; and the fourth took 1,667 labor hours and $35,640 in parts. Johnson was asked to bid on a follow-on contract for another dozen receiver/transmitter units. (Hint: There are two learning curves-one for labor and one for parts.) Use Exhibit 6.5.
a. How many labor hours should Johnson estimate are needed for the additional 12 units?
b. How much should Johnson estimate the parts cost will be for the additional 12 units?