ExpertMedium2 marksMultiple Choice
ACCA · Question 12 · Budgeting and control
Section A
AeroSpace Inc. is manufacturing a new satellite component. The first unit took 100 hours to produce. The company experiences an 80% learning curve.
What is the cumulative average time per unit to produce the first 4 units?
Section A
AeroSpace Inc. is manufacturing a new satellite component. The first unit took 100 hours to produce. The company experiences an 80% learning curve.
What is the cumulative average time per unit to produce the first 4 units?
Answer options:
A.
80 hours
B.
64 hours
C.
51.2 hours
D.
256 hours
How to approach this question
Apply the doubling rule: Every time cumulative output doubles, the cumulative average time per unit is multiplied by the learning rate.
Full Answer
B.64 hours✓ Correct
Using the tabular method (doubling rule):
1 unit: Cumulative average time = 100 hours
2 units (doubled): Cumulative average time = 100 * 0.80 = 80 hours
4 units (doubled again): Cumulative average time = 80 * 0.80 = 64 hours.
Common mistakes
Calculating the total time instead of the cumulative average time, or applying the 80% to the total time.
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