1. Hereford Company is planning to introduce a new product with an 80% learning rate for production for batches of 1,000 units. The variable labor costs are $30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are $10,000 in fixed costs not subject to learning. What is the cumulative total time (labor hours) to produce 2,000 units based on the cumulative average-time learning curve?

a.160 hours

b.80 hours

c.20 hours

d.100 hours

2. An important type of nonlinear cost curve is the learning curve, and it

a.is an alternative measure of goodness of fit.

b.tells how tightly the data points cluster around the regression line.

c.shows how the labor hours worked per unit decrease as the number of units produced increases.

d.is the percentage of variability in the dependent variable explained by an independent variable.