CAF-5 · Chapter 10 · Question 10 of 10
If a company introduces a new complex product and expects a 90% learning curve to apply to the workforce, how should this effect be incorporated into standard costing?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) By adjusting the standard labour efficiency (hours required) for successive batches until a steady state is reached.
Explanation
The learning curve theory dictates that as workers repeat a new and complex task, they become faster, reducing the average time required per unit. Therefore, standard labour efficiency (hours) cannot be static at the beginning; it must be adjusted downwards for successive batches until the learning effect ceases (steady state).
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