Q&A Hero

Q: The first unit took 10 hours and the third unit took 5.7 hours. What is the improvement rate? A) 70% B) 30% C) 50% D) 90% E) 10%

Q: The first unit took 10 hours and the fourth unit 8.1 hours. What is the improvement rate? A) 99% B) 95% C) 90% D) 15% E) none of the above

Q: The first unit took 10 hours and the eighth unit took 1.25 hours. What is the learning curve? A) 50% B) 90% C) 80% D) 12.5% E) none of the above

Q: Kent Manufacturing produces a product that sells for $50.00. Fixed costs are $260,000 and variable costs are $24.00 per unit. Kent can buy a new production machine that will increase fixed costs by $11,400 per year, but will decrease variable costs by $3.50 per unit. Compute the revised break-even point in dollars with the purchase of the new machine. A.$500,000. B.$440,678. C.$521,923. D.$480,000. E.$460,000.

Q: The first unit took 10 hours and the fourth unit took 8.1 hours to complete. What is the learning curve? A) 100% B) 99% C) 95% D) 90% E) 80%

Q: The second unit of production took 9 hours. If the learning curve is 90% how long did the first unit take? A) 9 hours B) 10 hours C) 8.1 hours D) 8.5 hours E) none of the above

Q: Kent Manufacturing produces a product that sells for $50.00 and has variable costs of $24.00 per unit. Fixed costs are $260,000. Kent can buy a new production machine that will increase fixed costs by $11,400 per year, but will decrease variable costs by $3.50 per unit. Compute the revised break-even point in units if the new machine is purchased. A.10,438 units. B.8,814 units. C.10,000 units. D.9,200 units. E.9,869 units.

Q: The first product took 10 hours to build and the learning curve is estimated to be 90%. How long with it take to make the fourth unit? A) 10 hours B) 9 hours C) 8.1 hours D) 7.5 hours E) none of the above

Q: The first unit of a product took 832 hours to build, and the learning curve is 75%. How long will it take to make the 30th unit? (Use at least three decimals in the exponent if you use the logarithmic approach.) A) less than 200 hours B) from 200 to 225 hours C) from 225 to 250 hours D) from 2501 to 275 hours E) 275 or more hours

Q: Barclay Enterprises manufactures and sells three distinct styles of bicycles: the Youth model sells for $300 and has a unit contribution margin of $105; the Adult model sells for $850 and has a unit contribution margin of $450; and the Recreational model sells for $1,000 and has a unit contribution margin of $500. The company's sales mix includes: 5 Youth models; 9 Adult models; and 6 Recreational models. If the firm's annual fixed costs total $6,500,000, calculate the firm's break-even point in sales dollars. A.$13,250,000. B.$13,000,000. C.$12,750,000. D.$12,900,050. E.$12,750,625.

Q: Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price and cost data are: M N O Unit sales price $7 $4 $6 Unit variable costs 3 2 3 Total fixed costs are $340,000. The break-even point in sales dollars for the current sales mix is (round to the nearest thousand): A.$ 20,000. B.$289,000. C.$400,000. D.$629,000. E.$740,000.

Q: The first unit of a product took 832 hours to build, and the learning curve is 75%. How long will it take to make the 10th unit? (Use at least three decimals in the exponent if you use the logarithmic approach.) A) less than 250 hours B) from 251 to 275 hours C) from 276 to 300 hours D) from 301 to 325 hours E) 325 or more hours

Q: Mott Company's sales mix is 3 units of A, 2 units of B, and 1 unit of C. Selling prices for each product are $20, $30, and $40, respectively. Variable costs per unit are $12, $18, and $24, respectively. Fixed costs are $320,000. What is the break-even point in composite units? A.1,111. B.1,600. C.2,666. D.4,000. E.5,000.

Q: The learning curve for a product is 90 percent. The first unit took 10 hours to complete. The manufacturer wants to determine how many hours the fourth unit will take by using the logarithmic method. The coefficient b for that calculation is approximately A) -.1053 B) -.1520 C) -.3219 D) .6931 E) 8.1

Q: The ratio (proportion) of the sales volumes for the various products sold by a company is called the: A.Current product mix. B.Relevant mix. C.Sales mix. D.Inventory cost ratio. E.Production ratio.

Q: The learning curve for a product is 80 percent. The first unit took 100 hours to complete. The manufacturer wants to determine how many hours the fifth unit will take by using the logarithmic method. The coefficient b for that calculation is approximately A) -.0969 B) -.2231 C) -.3219 D) .80 E) 1.903

Q: A firm sells two products, Regular and Ultra. For every unit of Regular the firm sells, two units of Ultra are sold. The firm's total fixed costs are $1,612,000. Selling prices and cost information for both products follow. What is the firm's break-even point in units of Regular and Ultra? Product Unit Sales Price Variable Cost Per Unit Regular $20 $8 Ultra 24 4 A.31,000 of A and 31,000 of B. B.31,000 of A and 62,000 of B. C.10,333 of A and 20,667 of B. D.36,167 of A and 72,333 of B. E.62,000 of A and 31,000 of B.

Q: Which one of the following statements about learning curves is true? A) A learning curve assumes that the direct labor requirements per unit will DECREASE at an INCREASING rate as cumulative production increases. B) A larger learning curve rate implies faster (greater) learning. C) A learning curve graph usually follows a negative exponential curve. D) Learning curves can be used only for individuals, not for the whole organization E) None of the above is true.

Q: If it took 1000 hours to produce the first unit of a product, and the learning curve is 70%, how long will it take to produce units 26 through 50? A) 12,307 hours B) 8,404 hours C) 134 hours D) 3,903 hours E) none of the above

Q: Learning curves are A) the same for all products but different for different organizations B) the same for all organizations but different for different products C) the same for all organizations and all products D) different for different organizations and different products E) appropriate in services but not in manufacturing

Q: A CVP graph presents data on: A.Profit and loss on a per unit basis. B.Profit, loss, and break-even on a total dollar basis. C.Profit, loss, and break-even on a per unit basis. D.Only profit and loss on a total basis. E.Profit and loss on a budget and actual basis.

Q: Which of the following statements comparing learning curve rates (L) to improvement rates is true? A) The learning rate is the same as the improvement rate. B) The learning rate is a decimal value while the improvement rate is a percentage. C) A 90 percent learning curve corresponds to a 10 percent rate of improvement. D) Learning rates apply to labor only, while improvement rates apply to all resources. E) "Learning rates" is American usage, while "improvement rates" is British.

Q: The learning curve rate is A) the percentage of time it will take to make each unit when the production rate doubles B) the log-log of the annual rate change divided by the average unit cost C) always based on constant value dollars D) only considered valid after one year of data is accumulated E) always equal to at least 75%

Q: Which of the following statements is most appropriate with respect to a 70% learning curve? A) There will be a 70% decrease in direct labor per unit each time the production volume doubles. B) Each successive unit of production will take 70% of the direct labor of the previous unit. C) There will be a 30% decrease in direct labor per unit each time production volume doubles. D) Thirty percent of the production will be defective until full learning takes place. E) None of the above is true.

Q: In Keegan Corporation's most recent fiscal year, the company reported pretax earnings of $215,000. Fixed costs totaled $325,800, the unit selling price of the firm's only product was $60, and the variable costs per unit were 40% of the selling price. Based on this information, the firm's break-even point in units was: A.13,575 units. B.15,023 units. C.13,750 units. D.9,050 units. E.8,750 units.

Q: A 100% learning curve implies that A) learning is taking place for all products and workers B) learning is taking place at the best possible level C) a 100% reduction in the direct labor time takes place each time the production is doubled D) no learning is taking place E) None of the above is true.

Q: During a recent fiscal year, Creek Company reported pretax income of $125,000, a contribution margin ratio of 25% and total contribution margin of $400,000. Total variable costs must have been: A.$1,100,000. B.$1,200,000. C.$500,000. D.$1,600,000. E.$2,100,000.

Q: The fact that human activities typically improve when they are done on a repetitive basis is described by a A) normal distribution curve B) binomial distribution curve C) learning curve D) Poisson distribution curve E) repetition curve

Q: Which of the following statements regarding the usefulness of learning curves is false? A) An external use of learning curves is in supply-chain negotiations. B) A strategic use of learning curves is in evaluating company and industry performance. C) An internal use of learning curves is in establishing costs. D) An internal use of learning curves is in labor forecasting. E) A strategic use of learning curves is in establishing budgets.

Q: Learning curves can be applied to a variety of purposes internal to a firm, including A) labor forecasting B) scheduling C) establishing costs D) establishing budgets E) all of these

Q: At Midland Company's break-even point of 9,000 units, fixed costs are $180,000 and variable costs are $540,000 in total. The unit sales price is: A.$ 20. B.$ 40. C.$ 60. D.$ 80. E.$100.

Q: A job with a 90% learning curve required 20 hours for the initial unit. The fourth unit should require approximately how many hours? A) 16.0 B) 16.2 C) 18.0 D) 20.0 E) 54.2

Q: Mullis Corp. manufactures DVDs that sell for $5.00. Fixed costs are $28,000 and variable costs are $3.60 per unit. Mullis can buy a newer production machine that will increase fixed costs by $8,000 per year, but will decrease variable costs by $0.40 per unit. What effect would the purchase of the new machine have on Mullis' break-even point in units? A.4,444 unit increase. B.9,850 unit decrease. C.5,714 unit increase. D.4,444 unit decrease. E.No effect.

Q: Alvarez Company's break-even point in units is 1,000. The sales price per unit is $10 and variable cost per unit is $7. If the company sells 2,500 units, what will net income be? A.$ 4,500 B.$ 7,500 C.$17,000 D.$35,000 E.$3,000.

Q: Learning curves (or experience curves) were first applied to industry by __________ who was studying __________. A) Frank Lloyd Wright; architecture B) Frank Gilbreth; worker efficiency C) T. P. Wright; air frame manufacture D) Lilian Gilbreth; factory efficiency E) Frederick W. Taylor; scientific management

Q: Learning curves have a variety of purposes, which can be placed into these broad categories: A) services, industry, and military B) internal, external, and strategic C) wholesale, distribution, and retail D) arithmetic, logarithmic, and learning coefficients E) positive learning, neutral learning, and negative learning

Q: Leeks Company's product has a contribution margin per unit of $11.25 and a contribution margin ratio of 22.5%. What is the selling price of the product? A.$ 5. B.$20. C.$30. D.$40. E.$50.

Q: A learning curve A) plots man-hours per dollar versus time B) is mathematically described by a parabola C) should be plotted on polar coordinate graph paper D) is based on the premise that organizations learn from experience E) follows a normal distribution

Q: The Goldfarb Company manufactures and sells toasters. Each toaster sells for $23.75 and the variable cost per unit is $16.25. Goldfarb's total fixed costs are $25,000, and budgeted sales are 8,000 units. What is the contribution margin per unit? A.$7.50. B.$16.25. C.$23.75. D.$60,000. E.$1.25

Q: Mason Company manufactures and sells shoelaces for $2.00 per pair. Its variable cost per unit is $1.70. Mason's total fixed costs are $10,500. How many pairs must Mason Company sell to break even? A.5,250. B.6,176. C.35,000. D.52,500. E.61,760.

Q: Which of the following best conveys the essence of learning curves? A) As the number of repetitions increases, time per unit increases. B) As the number of repetitions decreases, time per unit increases. C) As the number of repetitions increases, time per unit decreases. D) As the number of repetitions increases, time per unit remains constant. E) As the number of repetitions increases, time per unit doubles.

Q: The fundamental premise underlying learning curve analysis is that A) tasks can be easily learned in organizations B) organizations and people become better at their tasks as the tasks are repeated C) learning takes place when people in organizations change D) total labor costs decrease as the number of production units increases E) doubling output cuts labor requirements per unit in half

Q: Reevaluation of learning curves is inappropriate.

Q: On an ordinary graph, unit times decrease at a decreasing rate, but on a log-log graph, the learning "curve" appears as a straight line.

Q: A firm that successfully pursues a steeper-than-industry-average learning curve and manages costs down may still fail if, by underestimating a strong competitor, it fails to gain the added volume necessary for the learning curve to exist.

Q: In the logarithmic approach formula to compute the time for the Nth unit, TN = T1Nb, the exponent b is the learning curve rate L, expressed as a decimal.

Q: The learning curve coefficient approach may be simpler to use than the logarithmic approach, but it requires the presence of a table of learning coefficients.

Q: The logarithmic approach to learning curve calculations allows us to determine the hours required for any unit.

Q: Forrester Company is considering buying new equipment that would increase monthly fixed costs from $120,000 to $150,000 and would decrease the current variable costs of $70 by $10 per unit. The selling price of $100 is not expected to change. Forrester's current break-even sales are $400,000 and current break-even units are 4,000. If Forrester purchases this new equipment, the revised break-even point in units would: A.Increase by 250. B.Decrease by 250. C.Increase by 12,000. D.Decrease by 8,000. E.Increase by 8,000.

Q: The arithmetic approach (or successive doubling approach) to learning curve calculations allows us to determine the hours required for any unit.

Q: Learning curves can be used to establish budgets.

Q: The learning curve may not be permanent; it can be disrupted by changes in process, personnel, or product.

Q: A project manager bases his time and labor estimates on a learning curve of 86%. The actual learning curve turns out to be 89%. The manager, because of the decreased learning, will complete his project in more time and with more labor use.

Q: A product sells for $200 per unit, and its variable costs are 65% of sales. The fixed costs are $420,000. What is the break-even point in sales dollars? A.$2,100. B.$6,000. C.$420,000. D.$646,154. E.$1,200,000.

Q: The learning curve in the steel industry and the learning curve in heart surgery have both been estimated at 79 percent.

Q: Fuschia Company's contribution margin per unit is $12. Total fixed costs are $84,000. What is Fuschia's break-even point in units? A.7,000. B.26,520. C.57,600. D.5,760. E.70,000.

Q: A 90% learning curve implies that each time the production volume is doubled the direct time per unit is reduced to 90% of its previous value.

Q: Maroon Company's contribution margin ratio is 24%. Total fixed costs are $84,000. What is Maroon's break-even point in sales dollars? A.$20,160. B.$110,526. C.$350,000. D.$240,000. E.$84,000.

Q: An 80% learning curve means that with each unit increase in production, labor requirements fall by 20%.

Q: If the first unit in a series of units takes 200 days to complete, and the learning curve is 80%, then the second unit will take 160 days.

Q: If the learning curve for a process is 100 percent, then each unit in a series of units will have the same labor requirements.

Q: Learning curves can only be applied to labor.

Q: The earliest application of learning curves appears in the work of architect Frank Lloyd Wright.

Q: The following information is available for a company's cost of sales over the last five months. Month Units sold Cost of sales January 400 $31,000 February 800 $37,000 March 1,600 $49,000 April 2,400 $61,000 Using the high-low method, the estimated total fixed cost is: A. $25,000 B. $30,000 C. $13,692 D. $100,000 E. $50,000

Q: Learning curves are based on the premise that people and organizations become better at their tasks as the tasks are repeated.

Q: The following information is available for a company's utility cost for operating its machines over the last four months. Month Machine hours Utility cost January 900 $5,450 February 1,800 $6,900 March 2,400 $8,100 April 600 $3,600 Using the high-low method, the estimated total fixed cost for utilities is: A. $1,500 B. $3,600 C. $6,000 D. $3,300 E. $2,100

Q: Experience curves are the opposite of learning curvesas one rises, the other falls.

Q: Experience curves may be valid for industrial applications, but have no role in services such as health care procedures.

Q: Operations Management, 10e (Heizer/Render) Module E Learning Curves True/False

Q: A method that estimates cost behavior by using just the highest and lowest volume levels is called the: A.Scatter method. B.High-low method. C.Least-squares method. D.Break-even method. E.Step-wise method.

Q: In queuing problems, arrival rates are generally described by the normal probability distribution.

Q: A copy center has five machines that serve many customers throughout the day; the waiting-line system for copy service has an infinite population while the waiting-line system for copier maintenance has a finite population

Q: A waiting-line system has three parts: the size of the arrival population, the behavior of arrivals, and the statistical distribution of arrivals.

Q: The two characteristics of the waiting line itself are whether its length is limited or unlimited and the discipline of the people or items in it.

Q: A statistical method for identifying cost behavior is the: A.Scatter diagram method. B.High-low method. C.Composite method. D.CVP charting method. E.Least-squares regression method.

Q: Waiting-line models are useful to operations in such diverse settings as service systems, maintenance activities, and shop-floor control.

Q: Operations Management, 10e (Heizer/Render) Module D Waiting-Line Models True/False

Q: Suppose that 1 customer arrives each minute in a Poisson distribution. Is it more likely that 2 customers or 0 customers will arrive each minute?

Q: Suppose that customer arrivals are governed by a Poisson distribution. If the average arrival rate is 60 customers each hour, how many times will 60 customers arrive during a one hour period for each time that only 40 customers arrive.

Q: A manufacturing plant is trying to determine how long the average line for a repair process will be. If 10 machines arrive each hour and must wait 6 minutes in the line, how long will the line be, on average?