Figure 3-9 Hereford 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.
Refer to Figure 3-9. What is the cumulative total time using the incremental unit-time learning curve to produce 2,000 units?

Question

Quizplus · Accepted Answer

The cumulative total time for 2,000 units with an 80% learning rate is calculated using the learning curve formula. The time for the first batch is 100 hours. For the second batch, the time is 80% of the first batch, which is 80 hours. Therefore, the cumulative total time is 100 + 80 = 180 hours.

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