28. CSO: 1A2b LOS: 1A2e
Propeller Inc. plans to manufacture a newly designed high-technology propeller for
airplanes. Propeller forecasts that as workers gain experience, they will need less time to
complete the job. Based on prior experience, Propeller estimates a 70% cumulative
learning curve and has projected the following costs.
Cumulative number Manufacturing Projections
of units produced Average cost per unit Total costs
1 $20,000 $20,000
2 14,000 28,000
The estimated cost of an order for seven additional propellers, after completing
production of the first propeller, would be
a. $34,880.
b. $54,880.
c. $92,000.
d. $98,000.
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