3. General Dynamics is considering the sale of satellite equipment to a government agency in Canada. The agency plans to purchase 8 units, although it would consider buying 16 units. General Dynamics has started a chart relating labor time required to units produced.
Units Produced (X) Time Required to
Produce the Xth Unit
1 10,000 hours
2 8,000 hours
4 6,400 hours
a) Complete the chart by filing in the labor time required to produce 8 and 16 units.
b) Assume the labor time costs $100 per hour. Compare the cost of producing the first unit to the cost of producing the 16th unit. What is the percentage of the cost of the 16th unit to the cost of the first unit?
The solution computes Labor time and costs to produce 8 and 16 units.