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This is not the correct answer. Please see the correct answer for an explanation. We have been unable to determine how to calculate this incorrect answer choice. If you have calculated it, please let us know how you did it so we can create a full explanation of why this answer choice is incorrect. Please send us an email at support@hockinternational.com. Include the full Question ID number and the actual incorrect answer choice -- not its letter, because that can change with every study session created. The Question ID number appears in the upper right corner of the screen. Thank you in advance for helping us to make your HOCK study materials better.
This answer results from calculating the average hours per unit for units 201-400 by multiplying the cumulative total number of hours to produce the first four batches by the learning rate to find the number of hours required for batches 5 through 8, then dividing the result by the number of units in batches 5 through 8 to find the average number of hours required per unit for the last four batches. The number of hours required for batches 5 through 8 is not calculated correctly. To calculate the number of hours required for batches 5 through 8, find the total number of hours required for all eight batches, then subtract the total number of hours required for batches 1 through 4 from that number. The difference will be the number of hours required for batches 5 through 8.
This is not the correct answer. Please see the correct answer for an explanation. We have been unable to determine how to calculate this incorrect answer choice. If you have calculated it, please let us know how you did it so we can create a full explanation of why this answer choice is incorrect. Please send us an email at support@hockinternational.com. Include the full Question ID number and the actual incorrect answer choice -- not its letter, because that can change with every study session created. The Question ID number appears in the upper right corner of the screen. Thank you in advance for helping us to make your HOCK study materials better.
The time required for the first batch of 50 units was 20 hours × 50 units, or 1,000 hours. If no learning had taken place, the second batch of 50 would also have taken 1,000 hours and thus the first two batches would have required 2,000 hours. However, we are told that the cumulative average hours per unit after the second batch (the average time per unit for all 100 units produced in the first two batches) was 16 hours per unit. Therefore, the cumulative total time required for the first 100 units was 16 × 100 = 1,600 hours. Instead of requiring 2,000 hours to produce 100 units, it took 1,600 hours. The degree of the learning curve the firm is experiencing is 1,600 ÷ 2,000 = .80 or 80%. If no learning took place during the 3rd and 4th batches of 50, the first four batches would require 1,600 hours × 2, or 3,200 to produce. However, with the firm's 80% learning curve, the cumulative total time required to produce batches 1 through 4 will be 3,200 × .80, or 2,560 hours. If no learning took place during the 5th through eighth batches of 50, eight batches would require 2,560 hours × 2, or 5,120 hours. However, with the firm's 80% learning curve, the cumulative total time required to produce batches 1 through 8 will be 5,120 × .80, or 4,096 hours. Since the time required to produce batches 1 through 4 will be 2,560 hours and the time required to produce batches 1 through 8 will be 4,096 hours, the number of hours required to produce batches 5 through 8 (200 units) will be 4,096 hours ? 2,560 hours, or 1,536 hours. The average hours per unit for units 201-400 (the last 200 units) will be 1,536 hours ÷ 200 units = $7.68 per unit.