Innova, SA ASet Up a Table with Columns for Cumulative Number of Management

question 19

Essay

Innova, SA., is beginning the production of a new product. Management believes that 500 labour hours will be required to complete the new unit. A 90 percent cumulative average-time learning curve model for direct labour hours is assumed to be valid. Data on costs are as follows: $\begin{array}{ll}\text { Direct materials } & £ 50,000 \text { per unit } \\\text { Direct labour } & £ 20 \text { per direct labour hour } \\\text { Variable manufacturing overhead } & £ 30 \text { per direct labour hour }\end{array}$
a.Set up a table with columns for cumulative number of units, cumulative average time per unit in hours, and cumulative total time in hours using the cumulative average-time learning curve. Complete the table for 1, 2, 4, and 8 units.
b.Set up a similar table assuming an 80 percent with the cumulative average-time learning curve.
c.What is the difference in variable cost of producing four units?

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Definitions:

Affiliated Group

A collection of related companies that function as a single economic entity through shared ownership and control.

Subsidiary Inclusion

The process of integrating a subsidiary company's financials into the parent company's financial statements.

Consolidated Income Tax Return

A singular income tax return filed by an affiliated group of corporations that combines their tax liabilities into one return, possibly resulting in tax benefits.

Advantages

Benefits or desirables attributes that contribute to the superiority of a product, service, or entity.