Learning Curves and CVP Analysis (Appendix 1). CalMain Industries, Inc. is considering introducing a new product which will sell at \(\$ 1,700\) per unit. The Engineering Department has studied the product design and the prociuction process and arrived at the following estimates:

1. Labor will follow an 80 percent learning curve.

2. The first unit of product will require 100 direct labor hours.

3. The labor rate is \(\$ 10\) per hour.

4. Variable factory overhead is \(\$ 4\) per direct labor hour.

5. Fixed factory overhead will increase \(\$ 5,000\) per year as a result of this product.

6. Materials will cost \(\$ 100\) per completed unit of product.

\section*{Required:}

1. Assuming there is no constraint on the available labor time during the year, how many units of the new product would have to be produced and sold to break even?

2. Assuming that maximum labor time available is 300 hours during the year, how many units of the new product can be produced? Will the company break even within that constraint? Explain.

3. Returning to Part (1), if the company could improve its learning rate to 75 percent, how many more units could it produce at the break-even point for an 80 percent learning curve?