Figure 3-9 Abboud Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units.The variable labor costs are $30 per unit for the first 1,000-unit batch.Each batch requires 100 hours.There are $10,000 in fixed costs not subject to learning.
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Refer to Figure 3-9.What is the cumulative total time (labor hours) to produce 2,000 units based on the cumulative average-time learning curve?
A) 100 hours
B) 80 hours
C) 160 hours
D) 20 hours

Question

Quizplus · Accepted Answer

Based on an 80% learning rate, the cumulative total time to produce 2,000 units would be:
Batch 1: 100 hours
Batch 2: 80 hours
Batch 3: 64 hours
Batch 4: 51.2 hours
Batch 5: 41 hours
Batch 6: 32.8 hours
Batch 7: 26.2 hours
Batch 8: 20.9 hours
Total labor hours = 416.1, which is closest to answer choice C (160 hours).

Figure 3-9 Abboud Company Is Planning to Introduce a New