Question

It cost a contractor $13,750 to manufacture their first unit. The company expects to experience a 93% unit learning curve. Estimate the cost of the 14th unit. (Round intermediate calculations to 4 decimal places)

Answer 1

$275

Explanation:

Price of first unit = $ 13,750

Unit Learning curve = 93%

T find the cost of 14th unit

Unit learning curve = 93%

So decrease in price in every unit = 7 %

Decrease in Price of one unit = 7 % of $13750

=
`(7)/(100) * 13750`

=$ 962.5

Price after one unit = 13750 - 962.5 = $ 12787.5

Decrease in price of 14 units = 14* 962.5

=$13475

Estimated price of 14th unit = $ 13750 - $13475

= $275