An 80% learning curve is expected for a repetitive and complex task. Which of the following statements is correct?

The learning curve theory, also known as the experience curve, describes the systematic relationship between cumulative output and the time required to produce a unit. An 80% learning curve specifically means that every time the cumulative quantity of production doubles, the cumulative average time per unit will be 80% of the previous cumulative average time. Therefore, the cumulative average time per unit reduces by 20% (100% - 80%) with each doubling of output. This principle applies to the cumulative average time, not the time taken to produce each individual, successive unit.

A. A reduction by 80% would mean the new average time is 20% of the old, which corresponds to a 20% learning curve, not an 80% one.

C. The learning curve model applies to the cumulative average time per unit when output doubles, not the incremental time for each individual unit.

D. This incorrectly applies the 20% reduction to the time for each successive unit, rather than the cumulative average time when total output doubles.

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1. CIMA Official Terminology (2017). The Chartered Institute of Management Accountants. The definition for 'Learning Curve' states: "An 80% learning curve means that as cumulative output doubles

the cumulative average time per unit produced falls to 80% of what it was." This directly implies a 20% reduction. (Section: L

Page 68).

2. Horngren

C. T.

Datar

S. M.

& Rajan

M. V. (2015). Cost Accounting: A Managerial Emphasis (15th ed.). Pearson Education. In Chapter 10

"Determining How Costs Behave

" the text explains the cumulative average-time learning model: "The cumulative average time per unit declines by a constant percentage each time the cumulative quantity of units produced doubles." An 80% learning curve means the average time drops to 80%

which is a reduction of 20%. (Chapter 10

pp. 363-364).

3. Drury

C. (2018). Management and Cost Accounting (10th ed.). Cengage Learning. Chapter 10

"The learning curve

" clarifies: "A 90 per cent learning curve means that the cumulative average time per unit will be 90 per cent of the previous cumulative average time per unit each time the cumulative output doubles... This represents a 10 per cent reduction in the cumulative average time per unit." This principle directly applies to the 80% curve in the question

indicating a 20% reduction. (Chapter 10

Section 10.2

p. 248).