CMA Final · Strategic Cost Management · Learning Curve
Kaveri Textiles completed its first batch of a new garment in 200 hours. After the first 8 batches, the total time taken was 1,166.4 hours. Assuming a cumulative average time learning curve, what is the learning rate?
The learning rate is 90%. The cumulative average for eight batches is 145.8 hours, which is 0.729 of the 200-hour first batch. Eight batches involve three doublings, and the cube root of 0.729 is 0.90, so the curve is a 90% learning curve.
- A80%
- B85%
- C90%Correct
- D95%
Explanation
Cumulative average for 8 batches = 1,166.4 / 8 = 145.8 hours. Ratio to the first batch = 145.8 / 200 = 0.729. Since 8 batches means three doublings, r^3 = 0.729, so r = 0.90. An 80% rate would give 0.512, i.e. 102.4 hours, which does not match the data.
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