LEARNING CURVE

Problem I

Zordon is a new competitor in the production of power rangers, and has to train its employees in the
process of making power morphers. To increase the speed of learning, Zordon will give a bonus to the
employee with the lowest cumulative average time per unit after eight units are completed. Jason took
50 hours to complete the first unit, and is subject to an 80% learning curve. Rocky took 60 hours to
complete the first unit, and is subject to a 70% learning curve. Tommy took 40 hours to complete the
first unit, and is subject to a 90% learning curve. Andross took 55 hours to complete the first unit, and is
subject to a 75% learning curve. Which employee will receive the bonus?
a) Jason
b) Rocky
c) Tommy

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d) Andross

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Answer: B Rocky

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No. of units Cumulative Average Time per Unit

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produced Jason Rocky Tommy Andross
1 50 rs e 60 40 55
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2 50*80%=40 60*70%=42 40*90%=36 55*75%=41.25
4 40*80%=32 42*70%=29.4 36*90%=32.4 41.25*75%=30.94
8 32*80%=25.6 29.4*70%=20.58 32.4*90%=29.16 30.94*75%=23.20
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16 25.6*80%=20.48 20.58*70%=14.41 29.16*90%=26.24 23.20*75%=17.40

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Problem II

A particular manufacturing job is subject to an estimated 80% learning curve. The first unit required 50
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labor hours to complete. If the learning curve is based on a cumulative average time per unit
assumption, what is the time required to complete the second unit?
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a) 50 hours
b) 45 hours
c) 40 hours
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d) 30 hours
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Answer: D 30 hours
Cumulative Average Time per Unit = 50*80% = 40
Total Cumulative Time = 40 x 2 = 80
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Incremental Time for Second Unit = 80  50 = 30

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 Problem III

Northern Defense manufactures radar systems. It has just completed the manufacture of its first newly
designed system, RS-32. Manufacturing data for the RS-32 follow:
Direct material cost $84,000 per unit of RS-32
Direct manufacturing labor time for first unit 4,400 Direct manufacturing
labor-hours
Learning curve for manufacturing labor time per radar system 85% Cumulative average time
Direct manufacturing labor cost $27 Per direct manufacturing
labor-hour
Variable manufacturing overhead cost $13 Per direct manufacturing
labor-hour

Requirement: Calculate the total variable costs of producing 2, 4, and 8 units.

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Solution:

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An 85% learning curve means b = -0.234465.

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ln(85%)
𝑏= ln(2) = −0.234465

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A B C D E F G
No. of Average Time per Unit Total Time Direct Direct VOH Cost Total VC
units � = (4,400)�−0.234465 (A*B) Material Cost Labor Cost (C*13) (D+E+F)
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(A*84,000) (C*27)
1 4,400.00 4,400.00 84,000.00 118,800.00 57,200.00 260,000.00
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2 4,400*85%=3,740.00 7,480.00 168,000.00 201,960.00 97,240.00 467,200.00

3 3,400.83 10,202.48 252,000.00 275,466.85 132,632.19 660,099.03
4 3,740*85%=3,179.00 12,716 336,000.00 343,332.00 165,308.00 844,640.00
5 3,016.95 15,084.76 420,000.00 407,288.61 196,101.92 1,023,390.53
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6 2,890.70 17,344.21 504,000.00 468,293.64 225,474.72 1,197,768.36

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7 2,788.09 19,516.62 588,000.00 526,948.72 253,716.05 1,368,664.77

8 3,179*85%=2,702.15 21,617.20 672,000.00 583,664.40 281,023.60 1,536,688,00
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Problem IV
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Assume the same information for Northern Defense as in the previous problem, except that Northern
Defense uses an 85% incremental unit-time learning model as a basis for predicting direct
manufacturing labor-hours.
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Requirement: Calculate the total variable costs of producing 2, 3, and 4 units.

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 Solution:

A B C D E F G
No. of Incremental Time per Unit Total Time Direct Direct VMOH Total Variable
units � = (4,400)�−0.234465 (Cum. Sum Material Cost Labor Cost Cost Costs (D+E+F)
of B) (A*84,000) (C*27) (C*13)
1 4,400.00 4,400.00 84,000.00 118,800.00 57,200.00 260,000.00
2 4,400*85%=3,740.00 8,140.00 168,000.00 219,780.00 105,820.00 493,600.00
3 3,400.83 11,540.83 252,000.00 311,602.28 150,030.73 713,633.01
4 3,740*85%=3,179.00 14,719.83 336,000.00 397,435.28 191,357.73 924,793.01
5 3,016.95 17,736.78 420,000.00 478,893.00 230,578.11 1,129,471.12
6 2,890.70 20,627.48 504,000.00 556,941.94 268,157.23 1,329,099.18
7 2,788.09 23,415.57 588,000.00 632,220.33 304,402.38 1,524,622.72
8 3,179*85%=2,702.15 26,117.72 672,000.00 705,178.38 339,530.33 1,716,708.72

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