Striker Auto is looking into their car manufacturing costs at its Kansas City Plant. Striker has recently received an order for 16 new custom roadsters and is evaluating its options for using two approaches to build these. Use the data table that follows to determine the total cost of assembling these 16 roadsters for each approach.
Labor Intensive Assembly Method Machine Intensive Assembly Method Direct Materials Per Car $20,000 $18,000 Direct Assembly Labor time for first car 1,000 labor hours 400 labor hours Learning curve for assembly labor time per car 85% cum avg time 90% incr unit time Direct assembly labor cost $15 per hour $15 per hour Equipment related indirect manufacturing cost $6 per direct assembly labor hr $22.5 per direct assembly labor hr Material handling related indirect manufacturing cost 50% of direct material cost 50% of direct material cost Learning curve = 85% - 0.234465 Learning curve = 90% - 0.152004.