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The Desert Company, which is under contract to the Nissan, assembles machine parts. As part...

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Accounting

The Desert Company, which is under contract to the Nissan, assembles machine parts. As part of its research program, it completes the assembly of the first of a new model (X200) of machines. The Nissan is impressed with the X200. It requests that Desert Company submit a proposal on the cost of producing another eight of X200. Desert reports the following cost information for the first X200 assembled and uses an 80% cumulative average-time learning model as a basis for forecasting direct manufacturing labor-hours for the next eight X200.
Direct labor hours to manufacture the first X20010,000 hours part
\table[[Direct labor cost per hour,$20,Per hour],[Overhead cost per hour,$10,Per hour],[Direct material cost,$12,000,Per unit]]
Required:
Calculate predicted total costs of producing 2,4, and 8 units of x200 model under cumulative approach.
Calculate predicted total costs of producing 2,3, and 4 units of X200 under incremental approach.
Analyze the difference between cumulative and incremental methods when the company produces 2 and 4 units of X200.
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