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Cumulative Total Time

Abboud Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units. The variable labor costs are $30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are $10,000 in fixed costs not subject to learning.

Refer to Figure 3-4. What is the cumulative total time (labor hours) to produce 2,000 units based on the cumulative average-time learning curve?
a - 100 hours
b - 80 hours
c - 160 hours
d - 20 hours


Solution Preview

The production of 2,000 units is equal to 2 batches (1,000 units per batch).
Doubling the number of ...

Solution Summary

This solution analyzes the cumulative total time to produce a certain number of units based on a cumulative average-time learning curve.