The direct labor times required to produce the first four units of a new product are shown below: Based on this data the estimated learning or improvement rate is
A)100%.
B)90%.
C)85%.
D)80%.

Question

The direct labor times required to produce the first four units of a new product are shown below:  Based on this data the estimated learning or improvement rate is
A)100%. 
B)90%. 
C)85%. 
D)80%.

Quizplus · Accepted Answer

The estimated learning or improvement rate can be calculated using the formula:
% Learning or improvement rate = (1 - Actual time for nth unit/Standard time for nth unit) x 100
Using the data provided, we can calculate the % learning or improvement rate for the second, third, and fourth unit as follows:

For the second unit:
% Learning or improvement rate = (1 - 16/22) x 100 = 27.3%

For the third unit:
% Learning or improvement rate = (1 - 13/19.8) x 100 = 34.8%

For the fourth unit:
% Learning or improvement rate = (1 - 12/18.84) x 100 = 36.3%

To estimate the overall learning or improvement rate, we can take the average of these three % rates:
% Learning or improvement rate = (27.3 + 34.8 + 36.3)/3 = 32.8%

Therefore, the closest choice is C (85%).

The Direct Labor Times Required to Produce the First Four