You Are a Consultant Called in to Estimate the Costs

Multiple Choice

You are a consultant called in to estimate the costs after the employees learn how to do a job more efficiently by repetition of new product. You find a company can produce a product the first time at a cost of $5,000. If their 90 percent learning curve allows them to reduce their costs on each unit, what is the total cost of producing 100 units of the new product?

A) $500,000
B) $390,000
C) $290,700
D) $250,687
E) $250,000