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8. Suppose that you are assigning costs to a major project to be undertaken this year by your firm, DynoSoft Applications. One particular coding process involves many labor-hours, but highly redundant work. You anticipate a total of 200,000 labor-hours to complete the first iteration of the coding and a learning curve rate of 70% (learning curve coefficient = .214 unit time, Pinto, p.285). You are attempting to estimate the cost of the twentieth (steady state) iteration of this coding sequence. Based on this information and a $60 per hour labor rate, what would you expect to budget as the cost of the twentieth iteration?

Respuesta :

Answer:

$2,565,360

Explanation:

Learning curve rate = [log (learning curve)] ÷ log 2

                                 = log (0.7) ÷ log 2

                                 = -0.515

Time to complete 20th iteration:

[tex]=Total\ labor\ hours\times[20^{-0.515}][/tex]

[tex]=200,000\times[20^{-0.515}][/tex]

= 200,000 × 0.21

= 42,756 labor hours

cost of the twentieth iteration = 42,756 labor hours × $60 per hour labor rate

                                                  = $2,565,360

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