Section A Learning Curves The following information is for the next Two Questions: Moss Point Manufacturing recently completed and sold an order of 50 units that had costs as follows. Direct materials Direct labor (1,000 hours x 8.50) Variable overhead (1,000 hours x $4.00)* Fixed overhead** *Applied on the basis of direct labor hours. **Applied at the rate of 10% of variable cost. The company has now been requested to prepare a bid for 150 units of the same product. Question 36: If an 80 percent learning curve is applicable, Moss Points total cost on this order would be esti mated at: a) $26,400 b) $31,790 c) $37,950 d) $38,500 $ 1,500 8,500 4,000 1.400 $15400 Question 37: If Moss Point experienced a 70 percent learning curve, the bid for 150 units would : a) Show a 30 percent reduction in the total direct labor hours required with no learning curve. b) Include increased fixed overhead costs. c) Be 10 percent lower than the total bid at an 80 percent learning curve. d) Include 6.40 direct labor hours per unit at $8.50 per hour. (CMA Adapted)
Posted on: Wed, 12 Mar 2014 11:04:17 +0000
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