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Regarding part (a) of the question, I was able to do the adjustments for note 1 and 3.
I also got correct note 3 part way and I got confused with the ACCA answer.Here is what I did to get the labour cost…
Average time for 100 units
a= .75 hours (I converted the 45 minutes in hours to make it easier)
x= 100 units
b= -0.152y= .75 * 100 (to the power of -0.152)= .37244
Average time for 99 units
a= .75 hours
x= 99 units
b= -.0152y= .75 * 99 (to the power of -0.152)= .37301
Total time for 100 units (.37244 * 100) = 37.244
Less: Total time for 99 units (.37301 * 99)= (36.928)
Time for the 100th unit= 0.316 hoursI then said in my mind that the company would set the labour hours requirement based on the time taken after the learning curve effect has ceased.
This is when I took the 0.316 hours and multiplied by the labour rate per hour of $34.37 and I got $10.86.The labour cost in the examiners answer is $10.96 but I also noticed the examiner calculated the time for 49,900 units and total time for 50,000 units and then found the labour cost. I am confused badly why she did this.
Is the way I did it above correct although I were a few cents of, would I have been given credit and how many in the exam? Am I totally wrong?What you have done is fine (and is the same as what the examiner has done, except that she working in minutes and you worked in hours). The difference is purely due to rounding and you would not lose marks.
The reason for calculating the cost of 50,000 is that the question wants the lifetime cost and over the life of the product 50,000 units are produced.
We know how long the first 100 take (using your figures it is 37.244 hours). However because the learning stops, the rest of the units (i.e. the remaining 49,900) will all take the same time as the 100th unit.
I hope that makes sense 🙂
Hi sir for Q3 (a) i dont understand why the total labour cost of 948558.23 is divided by 60.why is it divided by 60?and where did the 60 come from
So if i had multiplied 45minutes by 60 in the beginning then there would be no need for me to divide?and does it matter if we use 45mins or 0.75 hours
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