CMA Final · Strategic Cost Management · Learning Curve
A Pune engineering firm expects an 80% learning curve (cumulative average time model). The first unit of a new pump takes 100 labour hours. How many labour hours will units 3 and 4 together take?
Units 3 and 4 together take 96 hours. Under the cumulative average model the first 4 units average 64 hours, giving 256 hours, and the first 2 units total 160 hours. The difference of 96 hours is the time for the additional two units.
- A96 hoursCorrect
- B128 hours
- C64 hours
- D160 hours
Explanation
Average for 2 units = 80 hours, so total for 2 = 160. Average for 4 units = 64 hours, so total for 4 = 256. Units 3 and 4 take 256 - 160 = 96 hours. Taking 2 x 64 = 128 wrongly applies the 4-unit average to only two units.
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