Problem
Molton Motors makes large turbo engines. The company manufactured a prototype engine for Apex Corporation. Cost data on that engine follow:
Direct Material $22,000
Direct labor (2,000 hrs @ $20 per hour) 40,000
Variable Mfg Overhead (based on DL cost) 24,000
Total cost $86,000
Based on experience, Molton uses an 80% learning curve (-0.3219) to calculate costs. Apex wants a quote on 15 additional motors (Molton will keep the prototype).
REQUIRED
Calculate the variable cost of producing these fifteen motors.