250_Notes_6C

250_Notes_6C - ACCT 250 ACCOUNTING FOR DECISION MAKING...

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NOTES – CHAPTER 6C SPRING 2008 SUMMARY Here we examine learning curves and discuss potential issues with cost estimation. NOTES 1) Learning curves Learning may influence cost in a favorable way The presence of learning is well documented, particularly in manufacturing settings where labor is involved to complete repetitive tasks Learning curve analysis is a method for estimating average unit cost in the presence of learning The learning rate is the percentage by which average time falls from the previous level as output doubles So, if a firm used 100 hours to produce 10 units of output, how many hours will be used to produce the next ten units if the firm experiences an 85 percent learning rate? Excel example P6-51 – assume learning rate of 90% Increment al Time Outpu t Total  Hours Avg.  Time 1 250 250.00 250 2 450 225.00 200 4 810 202.50 610 8 1458 182.25 848 16 2624 164.03 1776 32 4724 147.62 2948 2b18d0e4b67de49c5b6e33de1d6996e6e9ce33d8.doc
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This note was uploaded on 04/18/2008 for the course ACCTG 250 taught by Professor Rabe during the Spring '08 term at Luther.

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250_Notes_6C - ACCT 250 ACCOUNTING FOR DECISION MAKING...

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