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# Satelite Problem

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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 60,380,000 + 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. 02 = 480,200 total labor hours for the whole project of 8 satellites 534,600-480,200 = 54,400×300= NOK 16,320,000 total cost saving for the project D.

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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 he 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 12,097,500 for 4 additional satellites identical to those I already produced. I came to this conclusion by taking the total labor cost of the first 12 units at 75% improvement curve and then calculating the total labor for 8 units based on a 75% improvement curve.

I subtracted the two to get the number for 4 satellites and then I multiplied that by skilled labor at a cost of NOK 300 per hour. I then added the expected cost of half the material because I would only need material for 4 satellites, not 8 satellites to come to the subtotal of direct cost. I then added a 25% profit, which is the desired about of profit for all projects to arrive at the total incremental price for the additional 4 satellites.

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