Question

Learning Curve percentage				0.80
Exponent for an 80% learning curve				-0.321900
Direct Material Cost, per unit				$74,400.00
DMLH, for first unit				2,790.00
DML$, per hour				$23.25
VMOH, per DMLH				$13.95
(6) Calculate the total variable cost of producing 2, 4, 8, and 16 units,
using the Cumulative average-time model.
(7) Calculate the total variable cost of producing 2, 3, 4, and 5 units,
using the Incremental unit-time model.

Answer 1

(6)	Cumulative No. of Units	Cumulative Avg. time per Unit	Cumulative Total Time
	(1)	(2)	(3) = (1) x (2)
	1	2,790	2,790
	2	(2,790 x 0.80) 2,232	4,464
	4	(2,232 x 0.80) 1,786	7,144
	8	(1,786 x 0.80) 1,429	11,432
	16	(1,429 x 0.80) 1,143	18,288
(7)		2 units	4 units	8 units	16 units
	Direct Material	148,800	297,600	595,200	1,190,400
	($74,400 x 2; 4; 8; 16)
	Direct Manufacturing Labor	103,788	166,098	265,794	425,196
	($23.25 x 4,464; 7,144; 11,432; 18,288)
	Variable Manufacturing Overhead	62,273	99,659	159,476	255,118
	($13.95 x 4,464; 7,144; 11,432; 18,288)
	Total Variable cost	314,861	563,357	1,020,470	1,870,714