DRILL is a company specialized in the design and fabrication of oil drilling rigs. The sales department just received two orders from two companies A and B. The production manager of DRILL decided to deliver the first 3 fabricated rigs to Company A and the next 4 fabricated rigs (rigs 4 to 7) to company B. It took DRILL

Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
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Ma1.

DRILL is a company specialized in the design and fabrication of oil drilling rigs. The sales department just

received two orders from two companies A and B. The production manager of DRILL decided to deliver the

first 3 fabricated rigs to Company A and the next 4 fabricated rigs (rigs 4 to 7) to company B. It took DRILL

company 50,000 labor-hours to manufacture the first oil drilling rig. Assume that DRILL experiences a

learning rate of 90%. At a labor rate of $100 per hour, what is the labor cost that should be charged

to each company (A&B)?

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