The learning curve theory, also known as the experience curve, posits that the time required to produce a unit decreases as the cumulative production volume increases. This reduction is not linear. The most significant time savings and efficiency gains occur with the initial units produced. As workers become more proficient, the incremental time saved on each subsequent unit becomes progressively smaller. Therefore, the time taken to produce each successive unit reduces, but it does so at a decreasing rate, causing the learning curve to flatten over time.

B. A constant rate of reduction would be represented by a straight line, which contradicts the established exponential nature of the learning curve model.

C. A reduction at an increasing rate would imply that efficiency gains accelerate with more production, which is the opposite of the observed learning curve effect.

D. The steady state is the point where the learning effect ceases and production time stabilises. This occurs after the learning period (i.e., after the 256th unit), not during it.

1. Drury

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

Section 10.3

"The learning curve model

" it is explained that "the amount of the reduction in the time per unit will become progressively smaller as more units are produced." This directly supports the principle of reduction at a decreasing rate.

2. CIMA (2019). CIMA P2 Advanced Management Accounting Study Text. Kaplan Publishing. Chapter 5

"Budgeting and Control

" details the learning curve effect

illustrating graphically and mathematically that the time per unit falls at a decreasing rate as cumulative output increases. The curve is shown to be steep initially and then flattens out.

3. Horngren

C. T.

Datar

S. M.

& Rajan

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

noting that the learning is faster in the early stages of production. The text states

"The learning curve is downward sloping but convex

indicating that learning occurs at a decreasing rate." (p. 361).