Cost Accounting
15th Edition
ISBN: 9780133428834
Author: Horngren
Publisher: PEARSON
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Chapter 10, Problem 10.29E
Learning curve, incremental unit-time learning model. Assume the same information for Northern Defense as in Exercise 10-33, except that Northern Defense uses an 85% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours.
(An 85 % learning curve means b = −0.234465.)
- 1. Calculate the total variable costs of producing 2, 3, and 4 units.
Required
- 2. If you solved Exercise 10-33, compare your cost predictions in the two exercises for 2 and 4 units. Why are the predictions different? How should Northern Defense decide which model it should use?
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10-29 Learning curve, incremental unit-time learning model. Assume the same information for Northern Defense as in Exercise 10-28, except that Northern Defense uses an 85% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours. (An 85% learning curve means b = -0.234465.)
Calculate the total variable costs of producing 2, 3, and 4 units.
If you solved Exercise 10-28, compare your cost predictions in the two exercises for 2 and 4 units. Why are the predictions different? How should Northern Defense decide which model it should use?
Can you provide step by step solution for every requirement?
Requirement 1. Calculate the total variable costs of producing 2, 3, and 4 units assuming that Northern Defense uses an 85% incremental unit-time learning model as a basis for predicting
manufacturing labor-hours.
Begin by calculating the cumulative total time in labor-hours using the incremental unit-time learning model. (Round the individual unit time for Xth unit to the nearest whole number)
Individual unit time for Cumulative total time:
Cumulative
number of units
1
2
Xth unit: Labor-hours
Labor-hours
3
Data table
Direct materials cost
Direct manufacturing labor time for first unit
Learning curve for manufacturing labor time per radar system
Variable manufacturing overhead costs
$ 83,000 per unit of RS-32
Direct manufacturing labor costs
"Using the formula for an 85% learning curve, b=
In 0.85
In 2
-0.162519
0.693147
3,900 direct manufacturing labor-hours
85% incremental unit-time"
20 per direct manufacturing labor-hour
12 per direct manufacturing labor-hour
=-0.234465
Chapter 10 Solutions
Cost Accounting
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