Learning Curve – Dani Ki Costing – CA Final Video Lectures
Learning Curve – Dani Ki Costing – CA Final Video Lectures | Learning Curve – Dani Ki Costing – CA Final Video Lectures | Learning Curve – Dani Ki Costing – CA Final Video Lectures
Back to Final Video Lecture Index Back to Final Video Lecture Index
Overview on Learning Curve
Learning curve in simple words is numerical calculation of increase in efficiency and productivity of the worker. This increased efficiency and productivity of the worker ultimately reduces the cost of production. Learning curve is also known as Experience Curve, Improvement Curve and Progress Curve. The experience says that the decreasing cost on each successive unit production will be in a decreasing trend. Learning curve relationship is denoted mathematically in equation format as follows: Y = Average time per unit of X units A = Time required for first unit &nb
sp; X = Cumulative number of units produced
b = Learning Coefficient. Learning curve is used by the management in analyzing cost – volume profit relationships, budgeting and profit planning, pricing decision making and setting standards in learning phase. Learning curve effect can be known from learning curve ratio which can be calculated as follows: Learning Curve Ratio = Average labour cost of first 2N Units Average labour cost of first N units Learning Curve effect helps to predict labour cost in advance when a new product or process is in initial stage as the effect of learning pattern is so regular that helps to derive uniform at rate of decline. Learning curve proves to be beneficial for detecting and correcting design bugs, decrease in labour and material cost, and many more areas. It is also useful in developing tooling methods. Along with the benefits it also carries certain limitations such as it is of no use when the date collected is invalid, also all the activities of the unit may not be subject to learning curve i.e. it may apply to some of the workers only.