Damir Qu decides to quit the analyst job and start his own company. In a team of his university friends, Paul and John, he creates a unique product. The first version will be released soon, and gentlemen expect to sell 12800 units for $95 per unit. Paul estimated that to produce the product, they will need 7.5 kg of plastic per unit, and it will cost 10 dollars per kilo throughout the life of the product. John believes that the company should buy equipment that costs $35 000 and rent a cosy office in South Butovo for $40 000 in total for the life of the product. Gentlemen will dispatch the product in batches of 100 units throughout the life of the product. The learning index for an 80%-learning curve is -0.3219. The effect of learning will reduce the direct labour cost throughout the life of the product total direct labour for the first batch is projected to be $4 000 with an 80% learning curve. However, the team has disputes on several essential questions. Damir Qu already knows how efficient you were solving the previous problem and contacts you again to help them with the following: 1. What are the total direct labour costs for 16, 32, 64, and 128 batches? What are the total direct labour costs for the corresponding units 2. What is the approximate break-even quantity in units? 3. If the learning rate changes from 80% to 90%, what will be the effect on break-even sales?

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