More companies are entering the bike market, and you are concerned about pressure to reduce the

price to compete with online retailers. Since you$$ve been in business for a few years, you are now

familiar with the companies that sell all of the components. Instead of buying the preassembled bikes,

you$$re considering buying the parts and building your bikes. To test this idea, you$$ve assembled a bike

that took $600$ minutes. Your Operations manager has experience with factory assembly and has

historical knowledge of the learning curve $($supplied in your data worksheet below the revenue table$).$

$1.$ Including the bike you$$ve already built, how many hours will it take to build $500$ bikes

$2.$ Look at options for the preassembled bike that you can buy for $$800.$ You can purchase the

components for $$675,$ but you must spend $$40/$hour $($wages$,$ taxes, insurance, etc.$)$ to assemble

them.

a$.$ Use the learning curve to calculate the costs to build each of the next $500$ bikes. $($IOW$,$

calculate the labor $+$ parts $=$ cost for every bike$)$

b$.$ At what unit have you gotten efficient enough on assembly that your build cost is lower

than the preassembled bikes