Question 1 (4 marks) W Incorporated manufactures weather satellites. The final assembly and testing of the satellites is a largely manual operation involving dozens of highly trained electronics technicians. The following learning curve has been estimated for the firm's newest satellite model, which is about to enter production.
Assembly and Testing
Average labor time per unit (hours)
300
150
12
Cumulative production in units
Required: 1. What will be the average labor time required to assemble and test each satellite when the company has produced four satellites? Eight satellites?
- What will be the total labor time required to assemble and test all satellites produced if the firm manufactures only four satellites? Eight satellites?
- How can the learning curve be used in the company's budgeting process? In setting cost standards?
Question 2 (6marks): The Houston Armadillos, a minor-league baseball team, play their weekly games in a small stadium just outside Houston. The stadium holds 10,000 people and tickets sell for $10 each. The franchise owner estimates that the team's annual fixed expenses are $180,000, and the variable expense per ticket sold is $1. (In the following requirements, ignore income taxes.) Required: 1. Using excel spreadsheet, prepare a profit-volume graph for the Houston Armadillos - What is the safety margin for the baseball franchise if the team plays a 12-game season and the team owner expects the stadium to be 30 percent full for each game?
- If the stadium is half full for each game, what ticket price would the team have to charge in order to break even?