The First Product Took 10 Hours to Build and the Learning

question 84

Multiple Choice

The first product took 10 hours to build and the learning curve is estimated to be 90%. How long with it take to make the fourth unit?

• A) 10 hours
• B) 9 hours
• C) 8.1 hours
• D) 7.5 hours
• E) none of the above

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Definitions:

Unit Product Cost

The total cost (direct materials, direct labor, and overhead) divided by the number of units produced.

Variable Costing

A costing method that includes only variable manufacturing costs - direct materials, direct labor, and variable manufacturing overhead - in the cost of a product.

Unit Product Cost

The total cost assigned to a single unit of product, including direct materials, direct labor, and allocated overhead.

Absorption Costing

An approach in financial accounting that wraps all expenses incurred in manufacturing including direct materials, direct labor, and all overhead (variable and fixed), into the product's cost.