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ACCA Applied Knowledge · Management Accounting · Analytical techniques in budgeting and forecasting

The first unit of a job took 40 hours. The total time for the first two units was 64 hours. Using the cumulative average time model, what learning rate is implied?

The implied learning rate is 80%. The average time for two units is 64 divided by 2, which is 32 hours. Dividing this by the first unit's 40 hours gives 80%. Using the second unit's 24 hours instead would wrongly give 60%.

  1. A60%
  2. B64%
  3. C160%
  4. D80%Correct

Explanation

The cumulative average time for 2 units is 64 / 2 = 32 hours. The learning rate is 32 / 40 = 80%. The 60% figure wrongly uses the second unit's time of 24 hours divided by 40.

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