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CMA Final · Strategic Cost Management · Learning Curve

Under a learning curve model, the learning rate is 80%. This means that:

An 80% learning rate means the cumulative average time per unit becomes 80% of its earlier level every time cumulative output doubles. It is not a reduction applied to each successive unit, and total time still rises as output increases.

  1. Aeach unit takes 80% of the time of the previous unit
  2. Bthe cumulative average time per unit falls to 80% each time cumulative output doublesCorrect
  3. Ctotal time falls by 80% when output doubles
  4. Dthe time for the first unit is 80% of standard time

Explanation

In the cumulative average model, the rate describes the fall in cumulative average time per unit when cumulative output doubles. It is not a unit-by-unit reduction, and total time does not fall.

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