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In: Statistics and Probability

Using the formula Yx=Axb, where: Yx = the cost of unit x (dependent variable) A =...

Using the formula Yx=Axb, where:

Yx = the cost of unit x (dependent variable)

A = the theoretical cost of unit 1 (a.k.a. T1)

x = the unit number (independent variable)

b = a constant representing the slope (slope = 2b)

Calculate the unit theory first theoretical unit cost (T1) if the production quantity was 270 and the average unit cost was $2.74. Assume a 78% learning rate.

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