Pohlman Company makes aircraft engines. Pohlman has noticed that, in general, each new engine design is subject to an 90 percent learning rate. Assume that the first unit produced takes 550 hours, and direct labor is paid an average of $45 per hour.
What if Pohlman is preparing a bid to build 16 engines? If necessary, round your answers to both parts to the nearest dollar.
Calculate budgeted labor cost for an engine design which Pohlman has built before (assume that 16 of these engines had been made previously and the first unit took 550 hours).
$
Calculate budgeted labor cost for a new engine design that Pohlman's workers have never made before (assume the first unit will take 550 hours).
$