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Hello sir. I was going through the past paper questions and I found a question testing on Learning curve theory and life cycle costing. I rely don’t understand how to find the life cycle cost per unit and how learning curve is connected to it please help me. ( Paper : Dec 2011: question 4 ) . thanks
To get the lifecycle cost per unit we need to total all the costs over the life of the product and divide my the total number of units we expect to produce over the life of the product.
(My lecture on life-cycle costing might help you understand)The relevance of the learning curve is that one of the costs will be labour. As more units are produced, the time taken per unit will reduce. It was therefore necessary in this question to use learning curve theory to estimate the total labour time (and hence the total labour cost).
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