Innova, Inc., is beginning the production of a new product. Management believes that 500 labor hours will be required to complete the new unit. A 90 percent cumulative average-time learning curve model for direct labor hours is assumed to be valid.
Innova, Inc., is beginning the production of a new product. Management believes that 500 labor hours will be required to complete the new unit. A 90 percent cumulative average-time learning curve model for direct labor hours is assumed to be valid.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Set up a table with columns for cumulative number of units, cumulative average time per unit in hours, and cumulative total in hours using the cumulative average time learning curve. Complete the table for 1,2,4, and 8 units.
What is the cumulative total time in hours for 8 units?
2. Set up a table assuming an 80% cummulative avergae time learning curve.
What is the cumulative total time in hours for 8 units?
3. What is the difference in variable cost of producing four units? (between the result using the 0.90 model and 0.80 model)
Transcribed Image Text:Innova, Inc., is beginning the production of a new
product. Management believes that 500 labor hours will
be required to complete the new unit. A 90 percent
cumulative average-time learning curve model for direct
labor hours is assumed to be valid.
Data on costs are as follows:
$50,000 per unit
$20 per direct labor hour
$30 per direct labor hour
Direct materials
Direct labor
Variable manufacturing overhead
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