Rule: The basic premise of the learning curve is that operating efficiency and/or production increases in repetitive tasks as experience is gained. The rate of improvement, measured by the learning curve, has a regular pattern that can be stated as follows: As cumulative quantities double, average cost per unit decreases by a specified percent of the previous cost. Choice "A" is correct. 32.0 hours cumulative average time per unit after completing four units.
Cumulative #
of Units
| Average Time
Per Unit
|
|---|
1 | 50 Hours |
2 | 40 Hours (50 × 0.8) |
4 | 32 Hours (40 × 0.8) |
Choices "b", "c", and "d" are incorrect, based on the above calculation.
