Learning Curve Theory

Topics: Learning curve, Hermann Ebbinghaus, Psychology Pages: 2 (694 words) Published: March 2, 2013
Learning Curve Theory is concerned with the idea that when a new job, process or activity commences for the first time it is likely that the workforce involved will not achieve maximum efficiency immediately. Repetition of the task is likely to make the people more confident and knowledgeable and will eventually result in a more efficient and rapid operation. Eventually the learning process will stop after continually repeating the job. As a consequence the time to complete a task will initially decline and then stabilise once efficient working is achieved. The cumulative average time per unit is assumed to decrease by a constant percentage every time that output doubles. Cumulative average time refers to the average time per unit for all units produced so far, from and including the first one made.

Major areas within management accounting where learning curve theory is likely to have consequences and suggest potential limitations of this theory.

Areas of consequence:
* A Standard Costing system would need to set standard labour times after the learning curve had reached a plateau. * A budget will need to incorporate a learning cost factor until the plateau is reached. * A budgetary control system incorporating labour variances will have to make allowances for the anticipated timechanges. * Identification of the learning curve will permit the company to better plan its marketing, work scheduling, recruitment and material acquisition activities. * The decline in labour costs will have to be considered when estimating the overhead apportionment rate. * As the employees gain experience they are more likely to reduce material wastage.

* The stable conditions necessary for the learning curve to take place may not be present – unplanned changes inproduction techniques or labour turnover will cause problems and affect the learning rate. * The employees need to be motivated, agree to the plan and keep to the learning...
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