26. CSO: 1A2b LOS: 1A2e
In competing as a subcontractor on a military contract, Aerosub Inc. has developed a new
product for spacecraft that includes the manufacturing of a complex part. Management
believes there is a good opportunity for its technical force to learn and improve as they
become accustomed to the production process. Accordingly, management estimates an
80% learning curve would apply to this unit. The overall contract will call for supplying
eight units. Production of the first unit requires 10,000 direct labor hours. The estimated
total direct labor hours required to produce the seven additional units would be
a. 30,960 hours.
b. 40,960 hours.
c. 56,000 hours.
d. 70,000 hours.
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