Harold's Picture manufactures various picture frames. Each new employee takes 6 hours to make the first picture frame and 4.8 hours to make the second. The manufacturing overhead charge per hour is $25
Required:
a. What is the learning-curve percentage, assuming the cumulative average method?
b. What is the time needed to build 8 picture frames by a new employee using the cumulative average-time method? You may use an index of ?0.1520.
c. What is the time needed to produce the 16th frame by a new employee using the incremental unit-time method? You may use an index of ?0.3219.
d. How much manufacturing overhead would be charged to the 16 picture frames using the average-time approach?
Answer:
a. Job Hours Cumulative Cumulative Average
1 6 6 6
2 4.8 10.8 5.4
Learning percentage = 4.8/6 = 0.90
b. Y = p × q
= 6 × 8− 0.1520
= 4.37 hours
or 1 unit = 6
2 units = 6 × 0.9 = 5.4
4 units = 5.4 × 0.9 = 4.86
8 units = 4.86 × 0.9 = 4.37 hours
Time to build 8 units: 8 × 4.37 = 35 hours
c. Y = p × q
= 6 × 16−.0.3219
= 2.458 hours
or 1 unit = 6
2 units = 6 × 0.8 = 4.8
4 units = 4.8 × 0.8 = 3.84
8 units = 3.84 × 0.8 = 3.072
16 units = 3.072 × .8 = 2.458 hours
d. Total time = 2.458 × 16 = 39.328 hours
Overhead charge = 39.328 × $25 = $983.20
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