A particular manufacturing job is subject to an estimated 80% learning curve. The first unit required 50 labor hours to complete. If the learning curve is based on a cumulative average time per unit assumption, what is the time required to complete the second unit?

Answer (A) is correct. The learning curve reflects the increased rate at which people perform tasks as they gain experience. The time required to perform a given task becomes progressively shorter. Ordinarily, the curve is expressed in a percentage of reduced time to complete a task for each doubling of cumulative production. One common assumption in a learning curve model is that the cumulative average time (and labor cost) per unit is reduced by a certain percentage each time production doubles. Thus, an 80% learning curve indicates that a doubling of production will reduce the cumulative average unit completion time by 20%. For example, if the first unit required 50 hours to complete, the average completion time after two units will be 40 hours (50 hours × 80%). If total production time is 80 hours (2 × 40 cumulative average time), and the first unit required 50 hours, the time to produce the second unit must be 30 hours.