A company can produce a small lot of products the first time at a cost of $3,000. If their 65 percent learning curve allows them to reduce their costs on each lot, what is the cost of producing the 20^th lot? A) $60,000 B) $18,585 C) $1,950 D) $466.20 E) $155.40

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Quizplus · Accepted Answer

The learning curve effect means that each time production doubles, the cost per unit decreases by a certain percentage. For a 65% learning curve, the cost of the 20th lot can be calculated using the formula: Cost of nth unit = Initial cost * (n^log(learning rate)/log(2)). Plugging in the values, the cost of the 20th lot is approximately $466.20.

A Company Can Produce a Small Lot of Products the First