Figure 23-3 Abboud Company Is Planning to Introduce a New Product with Product

question 13

Multiple Choice

Figure 23-3
Abboud Company is planning to introduce a new product with an 80 percent cumulative learning curve for production for batches of 1,000 units. The variable labour 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 23-3. What is the individual unit time (labour hours) to produce 2,000 units?

• A)100 hours
• B)80 hours
• C)20 hours
• D)60 hours

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Definitions:

Costs

The expenses associated with the production of goods or services, including but not limited to materials, labor, and overhead.

Competitive Industry

An industry where numerous firms compete against each other to sell similar products to consumers.

Average Total Cost

The total cost of production (fixed and variable costs) divided by the quantity of output produced.

Marginal Revenue

The augmented income obtained by selling one more unit of a good or service.