CMA Final · Strategic Cost Management · Learning Curve
A Pune firm's first unit of a new machine took 800 labour hours. The production process follows an 80% cumulative average time learning curve. What is the total time for the first 4 units?
The total time for four units is 2,048 hours. With an 80% cumulative average curve, the average time falls to 640 hours at two units and 512 hours at four units, so total time is 4 multiplied by 512.
- A2,048 hoursCorrect
- B1,600 hours
- C2,560 hours
- D1,920 hours
Explanation
Under the cumulative average model, each doubling of output cuts the cumulative average time to 80%. For 2 units average is 640; for 4 units average is 512. Total = 4 x 512 = 2,048 hours. Option 2,560 uses 4 x 640, which applies only one doubling.
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