Computing the learning curves

Reference no: EM13967179

Learning Curves

Modern Merchandise, Inc., makes and markets do-it-yourself hardware, housewares, and industrial products. The company's new Aperture Miniblind is winning cus- tomers by virtue of its high quality and quick order turnaround time. The product also benefits because its price point bridges the gap between ready-made vinyl blinds and their high-priced custom counterpart. In addition, the company's expanding product line is sure to benefit from cross-selling across different lines. Given the success of the Aperture Miniblind product, Modern Merchandise plans to open a new production facility near Beaufort, South Carolina. Based on information provided by its chief financial officer, the company estimates fixed costs for this product of $50,000 per year and average variable costs of

AVC = $0.5 + $0.0025Q

where AVC is average variable cost (in dollars) and Q is output.

A. Estimate total cost and average total cost for the projected first-year volume of 20,000 units.

B. An increase in worker productivity because of greater experience or learning during the course of the year resulted in a substantial cost saving for the company. Estimate the effect of learning on average total cost if actual second-year total cost was $848,000 at an actual volume of 20,000 units.

Reference no: EM13967179

Questions Cloud

Problem regarding the cost relations : Determine whether each of the following is true or false. Explain why. A. Average cost equals marginal cost at he minimum efficient scale of plant. B. When total fixed cost and price are held constant, an increase in average variable cost will typi..

Discuss a draft policy or plan for review : On the basis of the readings and your research, create a 3- to 4-page paper addressing the following: Discuss a draft policy or plan for review. What problem does it address, and what solutions does it propose? Identify the possible stakeholders' int..

Paperbacks to get highest profit with price discrimination : You are trying to discriminate between customers who are highpayers and lowpayers for books that you are selling. High payers are willing to pay $20 for a hardback and $12 for a paperback. What will be the highest profit you can make if you only se..

Minimum efficient scale estimation : Kanata Corporation is a leading manufacturer of telecommunications equipment based in Ontario, Canada. Its main product is microprocessor- controlled telephone switching equipment, called automatic private branch exchanges (PABXs), capable of hand..

Computing the learning curves : Modern Merchandise, Inc., makes and markets do-it-yourself hardware, housewares, and industrial products. The company's new Aperture Miniblind is winning cus- tomers by virtue of its high quality and quick order turnaround time.

How much would the total cost increase if the order quantity : If the annual demand for a product is 350,000 units, then the annual carrying cost rate is 25 percent of the cost of the unit, the product costs $14.75 per unit to purchase, and each time the product is ordered the related ordering cost is $53.00. Ho..

Three measures to ensure compensation scale is competitive : This survey should be a list of questions that will garner the information needed in order to help ensure that the job being surveyed is similar to the selected job. The questions must also acquire the salary information for the surveyed job.

Determine es and os for this system : Let P ⊆Rn be a convex set, and let x ε Rn with TP (x) 6= Φ. Prove that TP (x) is a convex cone.

Determine training needs required for trauma counselors : Determine the specific training needs required for trauma counselors. Describe how counselors know if they are acting outside their area of competence

User Account

All Pages