This is 80% of the total number of hours that would be required to produce 8 units if no learning took place. This is not the way to calculate the cumulative direcdt labor hours required for producing a total of eight units using the Cumulative Average-Time Learning Model.
The total number of direct labor hours required to produce 8 units using the Cumulative Average-Time Learning Model is: 10,000 (2 × .80) (2 × .80) (2 × .80), or 10,000 (2 × .80)3, which equals 40,960 hours.
This is the number of direct labor hours that would be required if no learning took place.
This answer results from multiplying $10,000 by .8 and getting $8,000; then multiplying $8,000 by .8 and getting $6,400; then multiplying $6,400 by .8 and getting $5,120; then summing $10,000 + $8,000 + $6,400 + $5,120 = $29,520. Under the Incremental Unit-Time Learning Model, $10,000 is the cost of the first unit; $8,000 is the cost of the second unit; $6,400 is the cost of the fourth unit; and $5,120 is the cost of the eighth unit. This is incorrect for two reasons: (1) the problem says to use the Cumulative Average-Time Learning Model, not the Incremental Unit-Time Learning Model; and (2) this would not be correct even for the Incremental Unit-Time Learning Model, because only the costs of the first, second, fourth and eighth units are included in the total.
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