New Venture, Inc

question 18

Essay

New Venture, Inc. has received a contract for 8 units of a new product. The contract is a cost-plus contract, with the total to be received equal to the total labor cost + 20%. New Venture found that the first unit of a new product required 120 hours to complete. The second unit was completed using only 114 hours. New Venture believes that the rate of learning that was observed will continue for all 8 units of the contract. The labor wage paid is $25/hour. The following factors are available for various rates of learning: 80% learning, b = -0.3219; 85%, b = -0.2345; 90%, b = -0.1520; 95%, b = -0.0740.
Required:
(a.) What will the total labor cost be for the contract?
(b.) What will the total fee be for the contract?

---

Definitions:

Problem-solving Skills

The ability to engage in a process to define a problem, generate solutions, evaluate alternatives, and decide on a course of action.

Schedule A

A form used in the U.S. to itemize deductions on an individual's federal tax return.

AGI Limitation

Refers to the limits placed on certain tax benefits or deductions that are based on the taxpayer's Adjusted Gross Income (AGI), restricting eligibility or the extent of benefits based on AGI.

Reimbursed

Reimbursed refers to the act of repaying someone for expenses they have incurred, often related to their employment or agreed upon activities.