An accounting analyst at Warbucks Corporation recently determined that the first 5 units completed in a new manufacturing process took 500 hours to complete, or an average of 100 hours per unit. The analyst also found that when the cumulative output produced doubles, the average labor time decreases by 20%. This is referred to as a learning curve. On the basis of this information, how many total hours would Warbucks use if it produces a cumulative amount of 40 units?

5

10

20

3rd Doubling 40 FORMULA:

Total cumulative time = Time req'd for the first batch x (2 x Learning Curve)^n where n is number of times the production has doubled