A firm received an order to make and supply eight units of standard product which involves intricate labour operations. The first unit was made in 10 hours. It is understood that this type of operations is subject to 80% learning rate. The workers are getting a wages rate of 12 per hour. 0 What is the total time and labour cost required to execute the above order? If a repeat order of 24 units is also received from the same customer, what is the labour cost necessary for the second order? 80% Learning Curve results are given below: Production (Units) Cumulative Average Time (hours) 1 10 2 8 6.4 5.12 4.096 32 3.2768 4 Total Time (hours) 10 16 25.6 40.96 65.54 104.86 8 16 5 p57 Labour time required for first eight units = 40.96 hours Labour cost required for 8 units = 40.96 hours * ? 12/hr = ? 491.52 Labour time for 32 units = 104.86 hours Labour time for first eight units = 40.96 hours Labour time required for 2nd order for 24 units = 63.90 hours Labour cost for 24 units = 63.90 hours * ? 12/hr = 766.80 Illustration 5 The learning curve as a management accounting has now become or going to become an accepted tool in industry, for its applications are almost unlimited. When it is used correctly, it can lead to increase business and higher profits; when used without proper knowledge, it can lead to lost business and bankruptcy, State precisely: Your understanding of the learning curve: (i) The theory of learning curve; (ii) The areas where learning curves may assist in management accounting; and (iv) Illustrate the use of leaming curves for calculating the expected average units cost of making. (a) 4 machines (b) 8 machines using the data below: Data: Direct Labour need to make first machine = 1000 hrs. Learning curve = 90% Direct Labour cost = 15/- per hour. Direct materials cost = 1,50.000 Fixed cost for either size orders = 60.000