A Manager Wants to Analyze the Learning Curve Associated with Producing

question 53

Multiple Choice

A manager wants to analyze the learning curve associated with producing one of his company's products. Accordingly, he has gathered the following data: $$\begin{array} { | l | l | } \hline \text { UNIT PRODUCED } & \text { TIME REQUIRED } \\\hline \text { Second } & 5 \text { hours } \\\hline \text { Fourth } & 4 \text { hours } \\\hline\end{array}$$
Approximately how long will it take to produce the 10th unit?

• A) 1 hour
• B) 2 hours
• C) 3 hours
• D) 4 hours
• E) 5 hours

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overhead, representing the expenses to convert raw materials into finished products.

Work in Process Inventory

Inventory that includes goods that are in the production process but have not yet been completed or transferred to finished goods.

Process Cost System

An accounting system used to accumulate costs in industries where a homogeneous product is produced on a continuous basis.

Work in Process

Inventory category for items that are currently being produced or in the process of being transformed into finished goods.