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Innova, Inc., is beginning the production of a new product. Management believes that 500 labor hours will be required to complete the new unit. A 90 percent cumulative average-time learning curve model for direct labor hours is assumed to be valid.

Innova, Inc., is beginning the production of a new product. Management believes that 500 labor hours will be required to complete the new unit. A 90 percent cumulative average-time learning curve model for direct labor hours is assumed to be valid.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 41P: Harriman Industries manufactures engines for the aerospace industry. It has completed manufacturing...
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1. Set up a table with columns for cumulative number of units, cumulative average time per unit in hours, and cumulative total in hours using the cumulative average time learning curve. Complete the table for 1,2,4, and 8 units.  

What is the cumulative total time in hours for 8 units?

2. Set up a table assuming an 80% cummulative avergae time learning curve. 

What is the cumulative total time in hours for 8 units?

3. What is the difference in variable cost of producing four units? (between the result using the 0.90 model and 0.80 model)

Innova, Inc., is beginning the production of a new product. Management believes that 500 labor hours will be required to complete the new unit. A 90 percent cumulative average-time learning curve model for direct labor hours is assumed to be valid. Data on costs are as follows: $50,000 per unit $20 per direct labor hour $30 per direct labor hour Direct materials Direct labor Variable manufacturing overhead
Transcribed Image Text:Innova, Inc., is beginning the production of a new product. Management believes that 500 labor hours will be required to complete the new unit. A 90 percent cumulative average-time learning curve model for direct labor hours is assumed to be valid. Data on costs are as follows: $50,000 per unit $20 per direct labor hour $30 per direct labor hour Direct materials Direct labor Variable manufacturing overhead
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