Ricardo Industries is preparing a bid for a special project requiring the production of 35,000 units. The engineering personnel have advised that the units can be produced in groups with the first group consisting of 1,000 units. A labor time needed per unit will be progressively smaller by a constant percentage rate as experience is gained in the production process. The method that would best estimate Ricardo's total cost for the project is:
A) Learning curve analysis
B) Multiple regression analysis
C) Account analysis
D) Engineering estimates analysis. (CMA adapted)

Question

Quizplus · Accepted Answer

Learning curve analysis is the best method for estimating total cost in scenarios where the time required to produce each unit decreases at a constant percentage rate as more units are produced, reflecting increased efficiency and experience gained over time.

Ricardo Industries Is Preparing a Bid for a Special Project