Refer to exercise A5.1(E). Assume 75% improvement rate for all the units starting the first unit and no research expense for the last 4 units. The price quoted for the additional units is approximately (choose the best answer): A NOK 45 million B NOK 57 million NOK 48 million NOK 60 million I World Satellite Telephone Exchange Project NSDC has a contract to produce eight satellites to support a worldwide telephone system (for Alaska Telecom, Inc.) that allows individuals to use a single, portable telephone in any location on earth to call in and out. NSDC will develop and produce the eight units. NSDC has estimated that the R&D costs will be NOK (Norwegian Krone) 12,000,000. Material costs are expected to be NOK 6,000,000. They have estimated that the design and production of the first satellite will require 100,000 labor hours, and an 80 percent improvement curve is expected. Skilled labor cost is NOK 300 per hour. Desired profit for all projects is 25 percent of total costs. E. Near the end of the project, Deutsch Telefon AG requests a cost estimate for four satellites identical to those you have already produced. What price will you quote them? Justify your price.
Refer to exercise A5.1(E). Assume 75% improvement rate for all the units starting the first unit and no research expense for the last 4 units. The price quoted for the additional units is approximately (choose the best answer): A NOK 45 million B NOK 57 million NOK 48 million NOK 60 million I World Satellite Telephone Exchange Project NSDC has a contract to produce eight satellites to support a worldwide telephone system (for Alaska Telecom, Inc.) that allows individuals to use a single, portable telephone in any location on earth to call in and out. NSDC will develop and produce the eight units. NSDC has estimated that the R&D costs will be NOK (Norwegian Krone) 12,000,000. Material costs are expected to be NOK 6,000,000. They have estimated that the design and production of the first satellite will require 100,000 labor hours, and an 80 percent improvement curve is expected. Skilled labor cost is NOK 300 per hour. Desired profit for all projects is 25 percent of total costs. E. Near the end of the project, Deutsch Telefon AG requests a cost estimate for four satellites identical to those you have already produced. What price will you quote them? Justify your price.
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Transcribed Image Text:Refer to exercise A5.1(E). Assume 75% improvement rate for all the units starting the first unit and no research
expense for the last 4 units. The price quoted for the additional units is approximately (choose the best
answer):
A NOK 45 million
B
NOK 57 million
NOK 48 million
NOK 60 million
I
Transcribed Image Text:World Satellite Telephone Exchange Project
NSDC has a contract to produce eight satellites to support a worldwide
telephone system (for Alaska Telecom, Inc.) that allows individuals to use a
single, portable telephone in any location on earth to call in and out. NSDC
will develop and produce the eight units. NSDC has estimated that the R&D
costs will be NOK (Norwegian Krone) 12,000,000. Material costs are
expected to be NOK 6,000,000. They have estimated that the design and
production of the first satellite will require 100,000 labor hours, and an 80
percent improvement curve is expected. Skilled labor cost is NOK 300 per
hour. Desired profit for all projects is 25 percent of total costs.
E. Near the end of the project, Deutsch Telefon AG requests a cost estimate
for four satellites identical to those you have already produced. What
price will
you quote them? Justify your price.
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