QUESTION 3 [Learning Curve Theory] (40 marks) ABC is a subsidiary of ZZZ is in the construction industry and provides skilled labour to the construction industry. They have recently been asked to bid for a bathroom fitting contract for a new development of 1200 identical apartments. ABC has not worked for this contractor before. The following information is available The first bathroom is expected to take 48 labour hours, but thereafter the time taken will be subjected to a 90% learning rate until the 400th bathroom is manufactured. Thereafter learning will stop and the time taken to manufacture the 400th bathroom will be the same as the time taken to make the remaining bathrooms. Labour costs R30 per hour and direct material are R50 per bathroom. The company absorbs overheads on a direct labour hour basis. The following information is available for the last 4 months. Month Month 1 Month 2 Month 3 Month 4 Labour hours worked 4650 4600 4700 4800 Overhead cost(R) 230000 227200 232000 233600 Budgeted direct labour hours are 120000 in a year. ABC uses the high low method to absorb overheads. a) Calculate the total cost, including the overhead cost that ABC can use to bid for the apartment contract (25 marks) b) Explain the conditions that are necessary for learning to take place in the work place. (15 marks)