This answer results from multiplying the number of direct labor hours required for the first batch (800) by 3 and again by .90. This is not the correct way to calculate the number of direct labor hours required to manufacture the next three batches (12 units). Calculate the total number of direct labor hours required for the first four batches (2 doublings), then subtract the number of direct labor hours required for the first batch, and you will have the number of direct labor hours required for batches 2 through 4.
This is the average cost per batch for the first four batches multiplied by 3 batches. This is not the correct way to calculate the number of direct labor hours required to manufacture the next three batches (12 units). Calculate the total number of direct labor hours required for the first four batches (2 doublings), then subtract the number of direct labor hours required for the first batch, and you will have the number of direct labor hours required for batches 2 through 4.
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The first doubling occurs with the second lot of four, which consists of 4 additional units. The second doubling occurs with the fourth lot of four, which consists of lots three and 4, each consisting of 4 units. So the second batch from the first doubling plus the third and fourth batches from the second doubling will constitute the next 12 units that this question is asking for. We need to find the total number of hours required for the first 16 units (batches 1 through 4), then subtract the number of hours required for the first 4 units (batch 1) from that number, and we have the number of hours required for the next 12 units after the first 4 units. 800 (2 × .9) (2 × .9), which is the same thing as 800 (2 × .9)2 = 2,592. That is the total number of direct labor hours required for the first 4 batches (16 units). Since the first batch of 4 units required 800 direct labor hours, the second, third and fourth batches will require 2,592 ? 800, or 1,792 direct labor hours. That is the number of direct labor hours that will be required to manufacture the next 12 units.
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