To solve this problem first we need to identify the learning curve percentage. The learning curve is a percentage of time reduction to complete a task for each doubling of cumulative production. In this case it is 60% ($72 ÷ $120). Hence, the cumulative average labor cost of a unit after the fourth batch is $43.20 ($72 × 60%). There are 400 units in 4 batches. The total labor cost is $17,280 ($43.20 × 400).
This is the average cost of one unit after 400 units have been produced multiplied by 100.
This is the average cost of one unit after 800 units have been produced multiplied by 100.
This is the average cost of one unit after 800 units have been produced multiplied by 400.
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