CMA Final · Strategic Cost Management · Learning Curve
Kaveri Engineering recorded that the first unit of a job took 200 hours, and the first 4 units together took 512 hours. Assuming a cumulative average-time learning curve, what is the learning rate?
The learning rate is 80%. The average time for 4 units is 128 hours (512 ÷ 4) against 200 hours for the first unit. Four units involve two doublings, so r² = 128/200 = 0.64, and the rate per doubling is the square root, 0.8.
- A64%
- B75%
- C80%Correct
- D85%
Explanation
The cumulative average time for 4 units is 512 / 4 = 128 hours. Going from 1 to 4 units is two doublings, so 200 × r² = 128, which gives r² = 0.64 and r = 0.8. The 64% option is r², the effect of two doublings, not the rate per doubling.
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