Answer:
$19,500
Step-by-step explanation:
The complete question is: "Each time the Company hires a new employee, it must wait for some period of time before the employee can meet production standards. New employees are paid $150 per hour. Management is unsure of the learning curve in its operation, but it knows the first job by a new employee takes 40 hours and the second and third job take 32 and 28 hours respectively. Assume all jobs to be equal in size. Assuming that the company uses the incremental learning curve method, the total labor cost for 4 units will be closest to?"
The first job takes 40 hours
The next job takes 32 hours.
So, the total hours for first 2 jobs = 40 hours+ 32 hours = 72 hours
Average hours for first 2 jobs = 72 hours / 2 = 36 hours. Learning curve percentage = 36 hours / 40 hours = 0.9 = 90%
So, the average for 4 jobs (double of 2 jobs) shall be 36*90% = 32.40 hours. Hence, Total hours for 4 jobs = 32.40 hours * 4 = 129.60 hours ≅ 130 hours. So, the total labor cost for 4 jobs = 130 hours * $150 per hours = $19,500