You Are a Cost Accountant for a Firm That Specializes

question 16

Essay

You are a cost accountant for a firm that specializes in "small" (under 10 billion dollars) defense contracts for specialty electronics products, such as fully portable, miniaturized CD-ROM imaging stations and global positioning transmitters/transponders. Your company is well respected in this field. One project up for competitive bids is a Field Service, Hands-Free, Individual Multi-Protocol Secure Communicator (a battlefield version of a cellular telephone, but built into each soldier's helmet, and containing necessary encryption technology). The Department of Defense wants 8 of these experimental devices to test their practicality. You have reviewed the contract specifications, and estimated that the first FSHFIMPSC should require 2350 hours, and that the product is subject to a 75% learning rate. All costs of the project (machine purchase, machine time, direct and indirect labor, and materials) have been bundled (allocated) into an hourly labor rate of $172 per hour. Determine the total project cost using the provided data.

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Definitions:

Estimated Values

Values computed from sample data that serve as approximations of population parameters.

Actual Values

The observed or measured values in a dataset, as opposed to predicted or estimated values.

Equal

Having the same value, quantity, or measure as another entity.

Y-Intercept

The y-intercept of a line or curve on a graph is the point at which it crosses the y-axis, indicating the value of the dependent variable when all independent variables are zero.