Hi,
Please note when employees become more familiar with the operation task the per unit labor hours will fall as experience is gained and production is more efficient ( Learning curve).
Note: As cumulative production double ie. From 1 to 2units and 2 to 4units and 4 to 8 units so on, The cumulative average time per unit falls to a certain fixed % called learining curve rate of the earlier average time |
|
|
so, |
|
|
This starts with the first unit |
5000/10 |
500 |
The second lot for 10 units |
(5000+3000)/20 |
400 |
therefore, the Learning rate is |
|
80.0% |
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Kishore Kumar N
Bengaluru
Karnataka
India
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Original Message:
Sent: 05-15-2023 07:47 AM
From: SARUN SIMON
Subject: Q & A - SECTION B - Budgeting
Hi,
Kishore thank you for the quick reply.
Sorry to ask.
I didn't get the logic behind the calculations..
My calculation goes like this:
• 5,000 direct labor hours for the first lot of 10 units
• 3,000 additional direct labor hours for the second lot of 10 units
Learning Curve = 3000/5000*100
= 60%
The answer is wrong. But I can't get the logic behind this.
WITH REGARDS,
SARUN PORATHUR SIMON
Original Message:
Sent: 5/15/2023 6:16:00 AM
From: Kishore Kumar Natakala
Subject: RE: Q & A - SECTION B - Budgeting
Hi,
The correct answer is letter d > 80%
slno: | Particulars | Working-1 | Working-1 Result | Comment |
1 | Average Hours for 10 units | (5000+3000)/20 | 400 Hours | |
2 | Average hours for 10 units | 5000/10 | 500 Hours | |
3 | Learning rate is | 400/500 | 80.0% | Answer is d |
------------------------------
Kishore Kumar N
Bengaluru
Karnataka
India
Original Message:
Sent: 05-15-2023 02:33 AM
From: SARUN SIMON
Subject: Q & A - SECTION B - Budgeting
Thank you Mr. Deepak, Kishore, Bilal for your previous answers.
Q.
A manufacturing company has the opportunity to submit a bid for 20 units of a product on which it
has already produced two 10-unit lots. The production manager believes that the learning
experience observed on the first two lots will continue for at least the next two lots. The direct labor
required on the first two lots was as follows.
• 5,000 direct labor hours for the first lot of 10 units
• 3,000 additional direct labor hours for the second lot of 10 units
The learning rate experienced by the company on the first two lots of this product is
a. 40.0%.
b. 60.0%.
c. 62.5%.
d. 80.0%.
I did not understand how they solved the problem.
WITH REGARDS,
SARUN PORATHUR SIMON