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Dear All. I am failing to follow the working of the suggested solution regarding cuculation of cumulative average time as well as total time for the month of November, hence wages cost. My working is as follows: Total time for 16 batches = 16*(200*16^-.1844245) giving 1919.0255 hrs. Total time for 8 batches is 1090.352 as given (I have no problem with this computation). Therefor the time for the 8 November batches is 828.6735 hrs (1919-1090). If this is valued @ 12 gives a cost of 9944.08. The examimer has 10800. Please identify were I am missing it. Thank you
Your answer would have been correct if learning continued in November.
However the question says that the learning effect stops at the end of October, which means that all of the production in November take the same time as the last batch in October (i.e. batch number 8).
To calculate the time taken for the 8th batch you need to subtract the total time to make 7 from the total time to make 8.
(Workings 2 of the examiners answer goes through the arithmetic for this bit.)Thank you Sir for the reply
I went along that angle as well but still I cannot reconcile to the given solution. If learning ended in Oct the the cumulative average time for all successive batches would be the same as that for the first four to Oct,that is 136.2944 giving a total time of 2180.7104 for the 8 units produced in Nov. Valuing this at $12 gives us a labor cost of $13089 as compared to the examiner’s $10800. Is this line of thinking flawed?
Yes – it is flawed.
The four batches made in October will each have got faster than the one before. It is when the very last batch is made that the learning effect stops.
So….it is necessary to calculate how long the 8th batch took, because all later batches will take the same time as the 8th batch (not the average time of batch numbers 5, 6, 7 and 8)
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