Assume the same information for Global Defence as in Exercise 19-14, except that Global Defence uses a 90% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours. (A 90% learning curve means b = 0.152004.)
REQUIRED
1. Calculate the total variable costs of producing 2, 3, and 4 units.
2. If you solved Exercise 19-14, compare your cost predictions in the two exercises for 2 and 4 units. Why are the predictions different? How should Global Defence decide which model it should use?