CMA Final · Strategic Cost Management · Learning Curve
Meera Engineering uses an 80% cumulative average learning curve. The first unit needs 50 hours and labour costs Rs 120 per hour. What is the labour cost of producing units 5 to 8 (the second batch of four)?
The labour cost is Rs 9,216. Total time for 8 units is 204.8 hours and for the first 4 units is 128 hours, so units 5 to 8 take 76.8 hours. At Rs 120 per hour, this gives Rs 9,216.
- ARs 9,216Correct
- BRs 24,576
- CRs 15,360
- DRs 12,288
Explanation
The average for 4 units is 50 × 0.64 = 32 hours, so the total is 128 hours. The average for 8 units is 32 × 0.8 = 25.6 hours, so the total is 204.8 hours. Units 5-8 take 204.8 − 128 = 76.8 hours, costing 76.8 × 120 = Rs 9,216. Rs 12,288 wrongly applies the 8-unit average to just four units.
Did you get it right without looking?
One question tells you little. A timed set on Learning Curve shows your real accuracy, how long you take and where you lose marks.
More Learning Curve questions
- Kaveri Engineering recorded that the first unit of a job took 200 hours, and the first 4 units together took 512 hours. Assuming a cumulativ…
- Kavya Aerospace Pvt. Ltd. wins an order for 8 units. The first unit takes 1,000 hours and an 80% cumulative average curve applies. Labour is…
- Standard time for the first 4 units of a product was set using an 80% learning curve (cumulative average basis) with a first-unit time of 10…
- Sundaram Auto Components expects an 80% cumulative average time curve with a first-unit time of 100 hours. The standard time for units 9 to …
- Mehta Tools uses a 90% cumulative average-time learning curve for a new product. The first unit takes 200 hours. What are the total labour h…
- Ishaan Tools Ltd. applies an 80% incremental unit-time (Crawford) learning curve; the first unit takes 100 hours. Learning is expected to st…