Weathereye Inc. manufactures weather satellites. The final assembly and testing of the satellites is a largely manual operation involving dozens of highly trained electronics technicians. The following learning curve has been estimated for the firm’s newest satellite model, which is about to enter production.

Required:
1. What will be the average labor time required to assemble and test each satellite when the company has produced four satellites? Eight satellites?
2. What will be the total labor time required to assemble and test all satellites produced if the firm manufactures only four satellites? Eight satellites?
3. How can the learning curve be used in the company’s budgeting process? In setting cost standards?

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Average labor time per unit (hours) 300 150 Assembly and Testing 1 4 8 12 Cumulative production in units