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Ellington Company Manufactures a line of motorbikes and dirt bikes under the trade name cross counmtr. The company has been in business for almost $20$ yers and has maintained a profitable share of the recreational vehicle market due to its reputation for high quality prodycts. In addition, ellingtons engineering department has kept technology in the cross country bikes. Most subsassembly work for the bikes is subcontracted to reliable vendors. However, the final assembly and inspection of all poducts is performed at ellingtons plant.Ellingtron recently developed a new braking system for the dirt bike. because of the companys current availiabilty of production capacity, JIm Walsh, production manager, recomended that the first lot of the new braking system be manufactured in house rather than subcontractors. This $120$ Unit production run has been completed. The cumulative average labor hours per unit for the new braking system was $120$ hours. ellingtrons experience with similiar products indiccate athat a learning curve of $80\%$ is applicable and that the learning factor can be expected to extend only through the fourth production run for a total of $480$ units Ellingytons direct labor cost is $23$ per direct labor hour.

$1.$ Ellingyton company has an imediate requirement of $1000$ units for braking system. Determine future direct labor cost to produce.

$2.$ A consultant has advised joyce that the learning rate is closer to $75\%.$ What is the effect on projected costs for using a $75\%$ learning rate opposed to an $80\%?$

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