your acquisition program expects to award a vehicle production contract in April 2005. The first item from this contract is expected to be delivered in January 2006. The estimated unit cost for each vehicle is $1 million (then-year dollars and the contractor can deliver exactly 3 items per month beginning January 2006.
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$3m
To determine the total cost of the vehicle production contract, you can follow these steps:
1. Calculate the number of months between April 2005 and January 2006:
January 2006 - April 2005 = 9 months
2. Determine the number of delivery months after January 2006:
Since the contractor can deliver exactly 3 items per month, the number of delivery months can be calculated by dividing the total number of items by the delivery rate:
Total number of items = Number of vehicles x Number of items per vehicle
Total number of items = 3 vehicles x 1 item per vehicle = 3 items
Number of delivery months = Total number of items / Delivery rate
Number of delivery months = 3 items / 3 items per month = 1 month
3. Calculate the total cost of the vehicle production contract:
Total cost = Number of vehicles x Unit cost per vehicle
Total cost = 3 vehicles x $1 million = $3 million
So, the total cost of the vehicle production contract is $3 million.