FEMA (Federal Emergency Management Agency) has ordered 25 specialized test units capable of field checking 15 separate elements in potable water inemergency situations. Thompson Water Works, Inc., the contractor, took 200hours to build the first unit. If direct and indirect labor costs average $50 perhour, and an 80% learning rate is assumed, estimate (a) the time needed to complete units 5 and 25, and (b) the total labor cost for the 25 units.

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter3: Benefits, Costs, And Decisions
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FEMA (Federal Emergency Management Agency) has ordered 25 specialized 
test units capable of field checking 15 separate elements in potable water in
emergency situations. Thompson Water Works, Inc., the contractor, took 200
hours to build the first unit. If direct and indirect labor costs average $50 per
hour, and an 80% learning rate is assumed, estimate (a) the time needed to complete units 5 and 25, and (b) the total labor cost for the 25 units.

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