You have been asked to estimate the cost of 100 prefabricated structures to be sold to a local school district. Each structure provides 1,000 square feet of floor space, with 8-feet ceilings. In 2006, you produced 70 similar structures consisting of the same materials and having the same ceiling

Question

You have been asked to estimate the cost of 100 prefabricated structures to be sold to a local school district. Each structure provides 1,000 square feet of floor space, with 8-feet ceilings. In 2006, you produced 70 similar structures consisting of the same materials and having the same ceiling height, but each provided only 800 square feet of floor space. The material cost for each structure was $25,000 in 2006, and the cost-capacity factor is 0.65. The cost index values for 2006 and 2017 are 200 and 289, respectively. The estimated manufacturing cost for the first 1,000-square-foot structure is $12,000. Assume a learning curve of 88% and use the cost of the 50th structure as your standard time for estimating manufacturing cost. Estimate the total material cost and the total manufacturing cost for the 100 prefabricated structures. (3.3, 3.4)

Accepted Answer

Material Costs: [latex] I_{2006} [/latex] = 200 [latex] I_{2017} [/latex] = 289 X = 0.65

[latex]S_{2006}[/latex] = 800 [latex]S_{2017}[/latex] = 1000

[latex]C_{2006} [/latex] = $25, 000

[latex]C_{2017} [/latex] = $25, 000 [latex]\left(\frac{289}{200} \right) \left(\frac{1000}{800} \right)^{0.65}[/latex] = $41, 764

Manufacturing Costs: s = 0.88 K = $12, 000

[latex] Z_{50} [/latex] = $12, 000 [latex]\left(50\right)^{{\log \left(0.88\right) }/{\log\left(2\right) }} [/latex] = $5, 832
Total Cost = ($41,764 + $5,832)(100) = $4,759,600

Question 3.K: You have been asked to estimate the cost of 100 prefabricate...

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