Innova, SA ASet Up a Table with Columns for Cumulative Number of Management

Essay

Innova, SA., is beginning the production of a new product. Management believes that 500 labour hours will be required to complete the new unit. An 80 percent incremental unit-time learning curve model for direct labour hours is assumed to be valid. Assume that the exponent b = -0.3219. Data on costs are as follows: $\begin{array}{ll}\text { Direct materials } & £ 50,000 \text { per unit } \\\text { Direct labour } & £ 20 \text { per direct labour hour } \\\text { Variable manufacturing overhead } & £ 30 \text { per direct labour hour }\end{array}$
a.Set up a table with columns for cumulative number of units showing the cumulative total time in hours using the incremental unit-time learning curve. Complete the table for 1, 2, 3, and 4 units given the individual unit time for the nth unit as 500, 400, 351, and 320 for 1 to 4 units respectively.
b.Set up a similar table assuming a 90 percent with the incremental unit-time learning curve with the individual unit time for the nth unit as 500, 450, 430, 405 for 1 to 4 units respectively.
c.What is the difference in variable cost of producing four units?