Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 21

Are learning curves likely to affect materials costs per unit?

Step 1 of 2

Cost estimation

Cost estimation is an important exercise because it helps managers in decision making. Correct cost estimates result in cost saving and making business successful. Cost estimates helps managers to evaluate and choose the best alternative. It is important for managers to capture the correct cost for each alternative.

There different methods used for cost estimation like engineering, accounting and statistical analysis.

Learning phenomenon

Learning phenomenon explains the relationship between amount of experience to perform a job and actual time required to perform a job. According to learning phenomenon, the time required to perform a job keeps on reducing and percentage of time may require varies each time.