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regarding the below, I cannot understand how the answer came to Total time = 3,290.07 hours and Total time = 6,749.16 hours.
The time for the first batch of so units was 400 hours but the labour budget is the subject of a learning effect where the learning rate is 90%. The rate of pay for labour is $12 per hour.
The business had received and satis?ed an order for 600 units but it has now received a second order for another 800 units.
The value of b is: -0.152
What will be the cost of this second order? (no decimals please)
Time for the first order:
Y = 400 x 12-0.152
Y = 274.17285 hours
Total time = 3,290.07 hours
Time for ?rst 1,400 units (28 batches)
Y = 400 x 28-0.152
Y = 241.04158 hours
Total time = 6,749.16 hours
Time for second order = 6,749.16 — 3,290.07 = 3,459.09 hours
Cost of second order = 3,459.09 x $12/hr = $41,509.08
You can use the learning curve rules to calculate the total time for any number of batches starting from zero.
So you can calculate the total time for 600 units (12 batches of 50).
If they then make another 800 units, then they will have made 1,400 units (28 batches of 50). So we can calculate the total time for 1,400 units.
To get the time for the 800 extra units, we can’t calculate it directly. It is the total time for 1400 less the total time for the first 600.
All of this is explained in details, with examples, in my free lectures on learning curves. The lectures are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.