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Calculate the rate of learning at which the initial production phase profit target would be achieved, assuming no other cost savings can be made.
Assuming no other cost savings can be made the direct labour cost would have to reduce by $1,903 (i.e. the excess of cost above the target cost) to a total cost of $6,600 which is the equivalent of 660 hours at $10 per hour. 660 hours in total represents an average time of 10.3125 hours per batch (660 / 64 batches) Since the learning continued throughout the production of the 64 batches then this average can be used to determine the rate of learning required to achieve the target variable cost. 64 batches of production represent 6 doublings of cumulative output therefore: 10.3125 / 25 = 0.4125 6√0.4125 = 0.8628 The learning rate at which the target variable cost would be achieved is 86.3%
The Zooline Company (Pty) Ltd is an American based company that focuses on the LSM 8 -10 markets. They do vehicle interiors, raise or lower suspensions and install top end sound sy
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The controller for U.S. Route 66 Truck Parts is comparing traditional overhead allocationwith ABC. After studying both approaches, the controller prepared the following list of fea
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Questions 8-10 rely on the following data. FrontGrade Systems allocates manufacturing over- head based on machine hours. Each connector should require 11 machine hours. According t
Kenner company produces two products: SR200 and TX500. Budged sales for four months are as follows; SR200 TX500 May 8,000 20,000 June 13,000 32,000 July 11,000 39,000 August 18,000
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The Smiths have two children who live with them: Sandy and Judy. Both are full-time students. Sandy is an accomplished singer and made $4,200 during the year performing at special
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Target Income Calculations Breaking even is not the bad thing, but surely not a satisfactory outcome for most businesses. In its place, a manager might be more interested in le
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