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Answer (B) is correct . The underlying assumption of learning curve analysis is that workers gain productivity at a predictable rate as they gain experience with a new process. A common assumption is that the number of hours required for each doubling of output will be 80% of the hours required for the previous doubling. The effects of Aerosub’s projected ? learning curve on this product can be calculated as follows: Cumulative Cumulative Cumulative Units Average Total Batch Produced Labor Hours Labor Hours 1 1 10,000 10,000 2 2 8,000 (10,000 × 80%) 16,000 3 4 6,400 ? (8,000 × 80%) 25,600 4 8 5,120 ? (6,400 × 80%) 40,960

Answer (A) is incorrect because The figure of 29,520 results from improperly summing the cumulative average labor hour figures.
Answer (C) is incorrect because The figure of 64,000 results from improperly multiplying the cumulative number of units produced by the 10,000 hours spent on the first batch, then multiplying by the learning curve percentage.
Answer (D) is incorrect because The figure of 80,000 results from improperly multiplying the cumulative number of units produced by the 10,000 hours spent on the first batch.