Weathereye Ltd 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 firms newest satellite model, which is about to enter production.

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

Transcribed Image Text:

Assembly and testing Average labour time per unit (hours) 200 100 Cumulative production in units 12