Total variable costs for manufacturing 2 and 4 units are higher OR lower under the cumulative average-time learning curve relative to the incremental unit-time learning curve. Direct manufacturing labor-hours required to make additional units decline more slowly OR increase more rapidly in the incremental unit-time learning curve relative to the cumulative average-time learning curve when the same 85% factor is used for both curves. The reason is that, in the Cumulative average-time learning curve, OR incremental unit-time learning curve,

as the number of units double only the last unit produced has a cost of 85% of the initial cost. In the cumulative average-time learning model,OR incremental unit-time learning model, doubling the number of units causes the average OR individual cost of all the units produced (not just the last unit) to be 85% of the initial cost. How should Radars-upper R- US decide which model it should use? Managers should choose which model and what percent learning curve to use by using the same method and percent learning curve for all cases.OR on a case-by-case basis. Engineers, plant managers, and workers are a good source OR are not a good source of information on the amount and type of learning actually occurring. Plotting this information and estimating the model that best fits the data would be OR would not be helpful to Radars minus Upper- R-US when selecting the appropriate model.

Requirements 1. Calculate the total variable costs of producing 2, 3, and 4 units. 2. Compare the cost predictions from requirement 1 (incremental unit-time learning model) with the cost predictions of producing 2, 4, and 8 units based on a cumulative average-time learning model. Why are the predictions different? How should Radars -R-US decide which model it should use? Cumulative average-time learning models cumulative average time per unit and cumulative total time and total variable cost predictions of producing 2, 4, and 8 units: Number of Cumulative average time Cumulative total time: units per unit Labor-hours Labor-hours 3,230 6,460 10,984 2,746 2,334 18,672 Variable costs of producing 2 Units 4 Units 8 Units Total variable costs 437,320 793,328 1,448,224 Print Done