The First Unit of a Product Took 1,000 Hours to Build

question 104

Multiple Choice

The first unit of a product took 1,000 hours to build and the learning curve is 85%.How long will it take to make the first 5 units? (Use Table E.3)

• A)less than 4,005 hours
• B)from 4,005 to 4,015 hours
• C)from 4,015 to 4,025 hours
• D)from 4,025 to 4,035 hours
• E)from 4,035 to 4,045 hours

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Definitions:

Least-Squares Regression

A statistical method used to determine a line of best fit by minimizing the sum of the squares of the differences between observed values and those predicted by the model.

Inspection Cost

Expenses associated with the activities necessary to ensure that products or services meet the required standards and specifications.

Contribution Format

A format for the income statement that divides variable costs from fixed costs to emphasize the contribution margin.

Fixed Expenses

Costs that do not vary with the level of output or sales, such as rent and salaries.