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The first item of a new product took 3,500 hours to manufacture at a labour cost of $25 per hour. An
80% learning curve was expected to apply, and it was anticipated that learning would cease when 30
items had been produced.
What is the standard labour cost to include in the standard cost card for the product to
the nearest $100?
A. $700
B. $16,000
C. $29,400
D. $878,000Am sorry Sir I still failed to answer this question. Please help me.I went through the notes and lectures but could not still arrive at any answer given on the options given.
The amount to be included in the standard cost card will be the labour costs per unit when the learning has finished (because that will then be the cost per unit for all future units).
The learning finished once they have produced 30 units and so you need to calculate the cost of producing the 30th unit.
So you need to calculate the total time to produce 30 units, and then subtract the total time to produce 29 units, using the formula in both cases.
I show how to do this in my lectures, and (assuming you are using a Revision Kit from one of the ACCA approved publishers, as you must be) then the answer must show the workings for you to check.
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