A company can produce a small lot of products the first time at a cost of $2,000. If their 85 percent learning curve allows them to reduce their costs on each lot, what is the total cost of producing 5 lots?
A) $10,000.00
B) $9,376.50
C) $8,062.00
D) $4,031.00
E) $1,191.20

Question

Quizplus · Accepted Answer

The learning curve effect means that each time production doubles, the cost per unit decreases by a certain percentage. Here, the cost decreases by 15% each time production doubles. Using the learning curve formula, the total cost for 5 lots can be calculated, resulting in approximately $8,062.00.

A Company Can Produce a Small Lot of Products the First