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SCS-C01 - AWS Certified Security - Specialty

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The average labor cost per unit for the first batch produced by a new process is US $120. The cumulative average labor cost after the second batch is US $72 per product. Using a batch size of 100 and assuming the learning curve continues, the total labor cost of four batches will be:
A. US $2,592
B. US $4,320
C. US $10,368
D. US $17,280
Answer: D
The learning curve reflects the increased rate at which people perform tasks as they gain experience. The time required to perform a given task becomes progressively shorter.
Ordinarily, the curve is expressed in a percentage of reduced time to complete a task for each doubling of cumulative production. One common assumption in a learning curve model is that the cumulative average time and labor cost) per unit is reduced by a certain percentage each time production doubles. Given a US $120 cost per unit for the first 100 units and a US $72 cost per unit when cumulative production doubled to 200 units, the learning curve percentage must be 60% US $72 - $120). If production is again doubled to 400 units four batches), the average unit labor cost should be US $43.20 $72 x 60%). Hence, total labor cost for 400 units is estimated to be US $17,280 400 $43.20).

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