Can a tutor help plizzzzz…i need to score 90%
SVC is a car manufacturer. SVC is planning the development of a prototype hydrogen powered car, the Model Q. The prototype Model Q car will have a limited production run of 250 cars. To ensure that the Model Q is ready by SVC’s stated deadline, production will take place over the course of one month. Details for the development and production of the prototype Model Q are shown below.
Note: a prototype is defined as a preliminary version of a vehicle from which other forms may be developed.
Forecast development cost $6,500,000
Forecast design cost $1,300,000
Material cost $25,500 per car
Forecast manufacturing costs
Variable production overhead cost $780 per car (this is not related to labour hours)
Direct labour $60 per hour (see note 2 below)
SVC plans to hire a team of 12 specialist production staff. The specialist production staff will be paid a premium on their basic hourly rate of pay dependent on the total number of labour hours required to produce all 250 prototype Model Q cars as follows:
Total labour hours Premium on basic hourly labour rate0 – 2,000 35%2,001 – 2,500 30%2,501 – 3,000 25%3,001 – 3,500 20%More than 3,500 0%The premium on the basic hourly labour rate will be applicable to all labour hours during production.It is estimated that the manufacture of the first car will take 13 labour hours. There is expected to be a 95% learning curve that will continue until 128 cars have been produced. Thereafter, each car will take the same time to produce as the 128th.Learning curveNotes:1. The learning index for a 95% learning curve = -0.0742. The hourly direct labour rate stated above under ‘Forecast manufacturing cost’ is inclusive of a premium on the basic hourly labour rate, which has been calculated assuming that each of the 250 cars takes the same time to produce as the first.
Required:(a) Calculate the total labour cost of producing 250 cars.(6 marks)(b) Discuss life cycle costing, using the information given about the Model Q car to illustrate your discussion.(4 marks)(Total for Question Two = 10 marks