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Hello Sir
Can you please help me with the following question:
Designs plc has just developed a new product, XL. It took 36 minutes to produce the first batch of five XLs. Designs estimates that it can enjoy an 85% learning effect on production of the product. In order to set a price for the product, a standard cost card is being formulated.
How much time per unit should be included for the production of the 201st to 250th items?
A. 7.20 minutes
B. 2.88 minutes
C. 3.10 minutes
D. 2.26 minutesI calculated it as follows: first calculated cumulative average time per barch for the first 40 batches and then multiplied it by 40 batches to get cumulative total time for the first 40 batches (606.29 minutes). After, calculated cumulative average time per barch for the first 50 batches and then multiplied it by 50 batches to get cumulative total time for the first 50 batches (719.22 minutes). Then, 719.22-606.29=112.93 minutes, which is incremental total time for 10 batches (between the 40th and the 50th batches). And 112.93/50=2.26 minutes.
Is my way correct?
Thank you Sir
It seems to be correct – have you not checked with the answer in the book?
(How you do your workings for the MCQ’s is irrelevant as long as you get it right – nobody looks at your workings for the MCq’s in the exam.)
Correct answer: D
Below is the explanation given in the book:
First calculate b value as Log LR / Log 2
Now apply formula Y=ax2 twice (first x = 250 and then x=249)
Now calculate cumulative time for 250 units and then 249 units
Difference between cumulative hours of 250 units and 249 units will give you time of the 250th unit
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