Q. You are in charge of a large assembly shop that specializes in contract assignments. One of your customers has promised to award you a large contract for the assembly of 1,000 units of a new product. The suggested bid price in the contract is depends on an average of 20 hrs of direct labour per unit. You conduct a couple of test assemblies also find that, although the first unit took 50 hrs, the second unit could be completed in just 40 hrs.

a. Elucidate how many hrs do you expect the assembly of the third unit to take?

b. Elucidate how many hrs do you expect the assembly of the 100th unit to take?

c. Is the contract‘s assumption about the average labour hrs per unit valid or should the price be revised.