Innova,Inc ASet Up a Table with Columns for Cumulative Number of 500

question 72

Essay

Innova,Inc.,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 cumulative average-time learning curve.
c.What is the difference in variable cost of producing four units?

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