CHINHOYI UNIVERSITY OF TECHNOLOGY

SCHOOL OF ENTERPRENEURSHIP AND BUSINESS SCIENCES

DEPARTMENT OF ACCOUNTING & FINANCE

BACHELOR OF SCIENCE HONORS DEGREE IN ACCOUNTANCY-

BLOCK RELEASE
NAME NIGEL T. MUTUKWA

REG NUMBER C20141561Y

MODULE PERFOMANCE MANAGEMENT

ACCOUNTING [CUACM 413]

LECTURER JEFFRY NDHLOVU

PRESENTATION ON QUESTION 9[LEARNING

CURVE]
a) Determine whether the assumption of an 80% learning effect is a
reasonable one in this case
by using the standard formula: y = ax˄b

a = 40 hours x = 14 b = log 0,80/log 2 which is -0,321928094

y = 40 (14)˄-0,321928094
= 17,10366 (average time per unit)

Cumulative time per unit = 17,10366 * 14

= 239,45 hours

Therefore, with the learning curve effect of 80% Tripple E Investments

will take 239,45 hours to produce 14 units
The actual hours to produce 14 units = 240 hours

The hours to produce 14 units with the learning curve effect = 239,45hrs

The hours to produce 14 units with the learning curve effect of 80% are
slightly lower than the actual hours. Therefore, it is reasonable to put an
80% learning curve because it is true that the learning curve is effective.
b) Calculate the number of direct labour hours likely to be required for an expected second order of 20 units.

The time that it takes us to make 50 units – The time it takes us to make 30 units
50 Units 30 Units

y = ax˄b y = ax˄b
a = 40 x = 50 b = -0,321928094 a=40 x=30 b=-0,321928094
y = 40(50)˄-0,321928094 y = 40(30)˄-0,321928094
= 11,35 hours(average time) = 13,38
=11,35hours*50 units =13,38hours*30 units
= 567,5 hours = 401,4

Cumulative time = 567,5 – 401,4

= 166 hours per unit

Therefore, with the learning curve effect of 80% Tripple E Investments

will take 304.97 hours to produce a second order of 20 units
c) Use the cost data given, to produce an estimated product cost for the
initial order, Examine the problems which may be created for budgeting
by the presence of the learning effect.
$
Direct Materials ($30*30 units) 900
Direct Labour ($6*401,4 hours) 2 408,4
Variable overheads ($0,50*401,4 hours) 200,7
Fixed Overheads 6 000
Total production cost for initial order 9 509,1

NB: Fixed overheads do not change because we are assuming that the 30
units will be made in a 4 week period.
Budgeting Challenges:
 Inaccurate cost estimates: The learning effect can lead to
inaccurate cost estimates, making it difficult to set budgets and
manage resources effectively.
 Difficulty in pricing: The uncertainty about future costs
makes it difficult to price products accurately, impacting
profitability.
 Inventory management challenges: The dynamic nature of
production costs can lead to challenges in managing inventory
levels.
 d) Factors such as peer pressure, union-imposed constraints, and the state of
management worker relationships can affect productivity and limit learning.
Discuss this statement with the aid of examples.
 Factors Affecting Learning:

• Peer pressure: Positive peer pressure can encourage learning and

collaboration, while negative pressure can hinder it. For example A team
of new employees working together on a project can learn from each
other and achieve a high learning rate due to positive peer pressure on
the other hand negative peer pressure can lead to fraud especially with
worker that have insufficient resources to cope up with other workers’
lifestyle so that can lead workers to resort to stealing at the organization
and affect productivity and learning
• Union-imposed constraints: Trade unions can play a
significant role in the learning curve process by imposing
constraints on various aspects of production. These constraints
can affect the speed and efficiency of learning, ultimately
impacting the overall cost and productivity of the process. For
example those unions that people join in the workplace to call
for strike because of certain grievances like insufficient
resources or lack of motivation
• Management-worker relationships: A positive relationship can
foster open communication and collaboration, leading to better
learning outcomes, while a negative relationship can create
distrust and hinder learning. For example A team with open
communication and a trusting relationship with management is
likely to be more receptive to feedback and implement changes
CONCLUSION

The learning effect can be a valuable tool for improving

efficiency and reducing costs. However, it can also create
challenges for budgeting and pricing. It is important for
companies to carefully consider the factors that can affect
learning and develop strategies to mitigate the risks
associated with it.