March 24 ,MOCK exam

This topic has 1 reply, 2 voices, and was last updated 2 years ago by IAW3005.

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February 15, 2024 at 12:59 pm #700415
Anonymous
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HI
The labour cost per unit has been based on an expected learning rate of 95%, but HD Co’s operations director now believes that the actual learning rate is 90%.
so ANSWER is The cost gap will decrease and the target cost will remain the same ,
shouldnt the cost gap increase ,learn at a slower rate , take more hours to complete ? please explain
February 16, 2024 at 8:35 am #700483
IAW3005
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I think with a learning rate of 90% instead of 95%, the cost gap will increase, and the target cost will remain unchanged.
The target cost is determined by the selling price and the desired profit margin, which are not directly affected by the learning rate.
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