Break-even analysis

ABC Company used to assemble a toy Lion King in house for more than 2 years. This year, in view of additional orders received for coming Christmas, ABC decided to outsource an assembly contract of 350 units of Lion King to its supplier XYZ. Based on ABCs experience, the first unit requires 126 hours of direct labour to produce and the learning curve is 78%.

Questions: Determine (a) the average number of labour hours required to produce the first 100 units, and (b) the number of hours to produce 350 units.

Given: F value of PLC=78% at PP of

Pivot %	F value of PLC =78%
100	1
200	0.7800
300	0.6745
350	0.6382
400	0.6084
500	0.5616