Abboud Company is planning to introduce a new product with an 80 percent incremental unit-time learning curve for production for batches of 1,000 units.The variable labour costs are $30 per unit for the first 1,000-unit batch.Each batch requires 100 hours.There is $10,000 in fixed costs not subject to learning.What is the cumulative total time (labour hours)to produce 2,000 units?
A)80 hours
B)100 hours
C)160 hours
D)180 hours

Question

Quizplus · Accepted Answer

The cumulative total time to produce 2,000 units, considering an 80% learning curve, involves calculating the time for the first 1,000 units and then applying the learning curve to find the time for the second batch of 1,000 units. The first 1,000 units require 100 hours. For the second batch, the time required is 80% of the first batch's time, which is 80 hours (80% of 100 hours). Therefore, the cumulative time is 100 hours (first batch) + 80 hours (second batch) = 180 hours.

Abboud Company Is Planning to Introduce a New Product with an 80