Question

You are a purchasing manager of Colonel Motor, a specialized company that modifies military trucks. The R&D department of your company has developed a 10-speed automatic transmission that would provide considerable fuel savings for your low volume military trucks. The executive board gave the green light for the transition to new transmissions and your military counterparts have ordered 1000 of these transmissions for their existing trucks. Your company has a supplier agreement with a large transmission manufacturer that helped you design the new transmission. The agreement dictates that your company pay the manufacturer a total production cost plus fifteen percent (%15) profit. The total cost of materials for a new transmission is calculated as $150 and the fixed costs that the manufacturer charges for each transmission is $50. Your task is to determine the average labor hours needed to produce 1000 transmissions. Manufacturing company charges $50 per each labor hours. The pilot production of 15 new transmissions yielded the production labor hours as follows: Unit 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Labor hours 95.6 86.4 83.7 80.5 77.4 76.7 74.3 71.9 68.1 65.8 64.1 63.2 61.8 62.0 61.2 You are required to come up with a total/final price for the 1000 transmissions using the information given above.

Answer 1