Question

The ABC Corporation has purchased 50 pieces of a specially designed electronic component at $2,000 per unit. In the $2,000 selling price, $1,000 represents direct labor. Instead of an 80% learning curve, the supplier believes that either a 85% or 90% learning curve will be more indicative of what will occur in the future (starting at unit 51). What would be the unit cost of labor for the next 350 units using a 85% learning curve and a 90% learning curve?

Answer 1

94.72

Step-by-step explanation:

given data

time taken = 15 min

learning curve = 80%

solution

we use here formula for this task that is

T(n) = T × .............1

here T(n) is time taken for n unit and T is time for 1st hour and No is no of time and b is slope leaning

put here value for 25 we get

T(n) = 15 ×

b(25) = 0.355

as leaning curve coefficient table

as here with 80% leaning curve

unit timer coefficient = 0.355

so T(25) = 15 × 0.355

T(25) = 5.325 min

and

for 10 exam

leaning curve 80% co efficient is 6.315 from table

so T (10) = 15 × 6.315

T (10) = 94.72 min

Answer 2

cumulative learning factor for 85% and 400 units = 127.6

cumulative learning factor for 90% and 400 units = 189.3

total labor costs for producing the next 350 units = labor cost for producing 400 units - labor cost for producing 50 units

85% learning curve:

total labor costs for producing 400 units = $1,000 x 127.6 = $127,600

total labor costs for producing 50 units = $1,000 x 50 = $50,000

total labor costs for producing the next 350 units = $127,600 - $50,000 = $77,600

labor cost per unit = $77,600 / 350 = $221.71

90% learning curve:

total labor costs for producing 400 units = $1,000 x 189.3 = $189,300

total labor costs for producing 50 units = $1,000 x 50 = $50,000

total labor costs for producing the next 350 units = $189,300 - $50,000 = $139,300

labor cost per unit = $139,300 / 350 = $398