CMA Final · Strategic Cost Management · Learning Curve
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 hours for the first 8 units?
The first 8 units need 1,166.4 labour hours. Eight units mean three doublings, so the cumulative average time is 200 × 0.9 × 0.9 × 0.9 = 145.8 hours per unit. Multiplying by 8 units gives 1,166.4 hours in total.
- A1,166.4 hoursCorrect
- B1,296.0 hours
- C1,440.0 hours
- D1,458.0 hours
Explanation
Going from 1 to 8 units is three doublings, so the average time is 200 × 0.9³ = 145.8 hours. Total time is 8 × 145.8 = 1,166.4 hours. The 1,296-hour option uses only two doublings (0.9²), and 1,440 hours applies 90% just once.
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