CMA Final · Strategic Cost Management · Learning Curve
Kaveri Tools makes a special die. The first unit takes 100 labour hours, and an 80% cumulative average learning curve applies. Labour costs ₹150 per hour. What is the labour cost of producing the 3rd and 4th units together?
The labour cost is ₹14,400. Total time for four units is 256 hours and for two units is 160 hours, so the third and fourth units need 96 hours. At ₹150 per hour, this comes to ₹14,400.
- A₹14,400Correct
- B₹24,000
- C₹38,400
- D₹19,200
Explanation
Total time for 2 units = 2×80 = 160 hours. Total time for 4 units = 4×64 = 256 hours. Units 3 and 4 take 256 − 160 = 96 hours, and 96 × ₹150 = ₹14,400. The figure ₹24,000 is the cost of the first two units. ₹38,400 is the cost of all four units. ₹19,200 uses the 4-unit average of 64 hours for two units.
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