Question: *struggle with the learning curve * Synergen plc is a prototype design and manufacturing company which specialises in combining cutting edge digital technology with a wide range of model-making skills to generate products in the advanced medical equipment sector. The company has two divisions, Division X and Division Y. Each division has its own,

AccountingAccounting questions and answers*struggle with the learning curve *
Synergen plc is a prototype design and manufacturing company
which specialises in combining cutting edge digital technology with
a wide range of model-making skills to generate products in the
advanced medical equipment sector. The company has two divisions,
Division X and Division Y. Each division has its own,Question: *struggle with the learning curve *
Synergen plc is a prototype design and manufacturing company
which specialises in combining cutting edge digital technology with
a wide range of model-making skills to generate products in the
advanced medical equipment sector. The company has two divisions,
Division X and Division Y. Each division has its own,.*struggle with the learning curve *
Synergen plc is a prototype design and manufacturing company
which specialises in combining cutting edge digital technology with
a wide range of model-making skills to generate products in the
advanced medical equipment sector. The company has two divisions,
Division X and Division Y. Each division has its own, specialised
professional services department which provides prototypes for
clients planning the introduction of new products.
Part (ii).
In Division Y, the newly appointed Divisional General Manager
(DGM) of is about to authorise the start of work on a large-scale
design project, where Client B requires prototypes for multiple
variations of a new component, Component Beta. As Divisional
Management Accountant you have supplied the DGM with a schedule
specifying the average data per prototype derived from the budget
for the first batch of 10 prototype variations of Component
Beta:

Materials: £1,500,000.
Professional services: 10,000 labour hours @ £105 per hour

 
It is budgeted that a second batch of Component Beta consisting
of 5 prototype variations will be provided once the first batch has
been completed. Although Component Beta is a new item, the
professional services department states that it is very similar to
Component Delta which was designed in the previous year and on
which an 80% learning curve based on a cumulative average-time
learning model was experienced; thus professional services staff
expect that an 80% learning curve based on a cumulative
average-time learning model will be obtained in the design of
Component Beta.
Required:
As Divisional Management Accountant of
Division Y, you are required to:

Present calculations of the budgeted cost per prototype of the
first batch of Component Beta to be
produced.         

(4 marks)

Present calculations of the budgeted incremental cost per
prototype of the second batch of Component Beta to be
produced.                                                                              

                                                                                                              (16
marks)

Present a report for your Divisional General Manager in which
you,

Explain the concept and applications of learning curves and
comment on the calculations presented in a) and b)
above                                                                                   

(15 marks)
Note:
As necessary, you decide to employ an
80% learning curve table derived from the experience of Component
Delta:

x       y
1 100.0%
1.5    87.6%
2 80.0%
When,
X = factor of output
Y = factor of cumulative average time
per design.
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