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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Definitions:

Grandfather

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The legal relationship created when personal property is transferred from one party to another under agreement that the property will be returned or otherwise disposed of according to the owner's directions.

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Fundamental Duty

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