Summary of LEARNING CURVE -LESSON 2 -ADVANCED MANAGEMENT ACCOUNTING

Summary of "LEARNING CURVE - LESSON 2 - ADVANCED MANAGEMENT ACCOUNTING"

Main Ideas and Concepts:

• The video continues the discussion of the LEARNING CURVE concept introduced in the previous class.
• The LEARNING CURVE is a key concept in management accounting that helps in estimating the time and cost required for production as the number of units produced increases.
• The lesson focuses on a practical example involving Spacecom Limited, which is planning to build a new radar system.

Key Concepts:

• Learning Rate: The percentage reduction in time taken to produce each additional unit as cumulative production increases. In this case, Spacecom believes a Learning Rate of 75% is appropriate.
• Cumulative Total Time: The total time required to produce a certain number of units, calculated using the formula T = a × x^b, where:
  • T = Cumulative Total Time
  • a = time taken to produce the first unit
  • x = cumulative production units
  • b = learning index calculated as b = log(r) / log(2), where r is the Learning Rate.

Methodology and Calculations:

1. Identify Variables:
   • First unit time (a) = 700 hours
   • Total units = 40
   • Learning Rate (r) = 75%
2. Calculate Learning Index (b):
   • b = log(0.75) / log(2) ≈ -0.415
3. Calculate Total Hours Required:
   • Use the formula: T = 700 × (40)^-0.415 ≈ 6,058 hours
4. Calculate Average Time per Unit:
   • Average time = Total hours / Total units
   • Average time = 6058 / 40 ≈ 151.45 hours
5. Determine Number of Workers Needed:
   • Each worker works 280 hours per year.
   • Number of workers = Total hours / Hours per worker
   • Number of workers = 6058 / 2080 ≈ 2.9 (rounded to 3 workers)

Conclusion:

The LEARNING CURVE concept is essential in estimating production time and resource allocation. The calculations demonstrate how to apply the LEARNING CURVE to a real-world scenario effectively.

Speakers/Sources Featured:

• The speaker is referred to as "Mimu" in the video.
• No additional sources are mentioned.

Notable Quotes

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Category

Educational

Video