Within 20 mints

Sciento Products manufactures complex electronic measuring instruments for which highly skilled labour is required. Analysis of production times has shown that there is a learning curve effect on the labour time required to manufacture each unit and it has been decided to allow for this in establishing future forecast times and costs. Records have been kept of the production times for one particular instrument, the V8, an extract of which follows. Cumulative production Units 1 2 4 8 Cumulative time Hours 200 360 648 1,166 Average time per unit Hours 200.0 180.0 162.0 145.8 . The labour time analyses have shown that the learning curve follows the general form Y = axb Where Y = average labour hours per unit X = cumulative number of units a = number of labour hours for first unit b = the learning index Sciento Products is planning to produce a new version of the V8, the V8ll, and believes that the same learning effect will apply to its production. The company wishes to forecast the cost per V811 in a future period, to which the following data applies. Estimated cumulative production at start of period 528 units Estimated production in period 86 units Estimated overheads $150,903 Estimated labour cost $10 per hour Estimated material cost per unit $250 Required (a) Calculate an estimated cost for the v8ll in the period in question. (b) Discuss the usefulness of allowing for the learning effect in forecasting future labour costs and times. (c) Discuss the limitations of the learning effect