Learning Curve

What’s it all about?

A technique in Budgeting that allows you to take into account improvements in performance over time so that you don’t over budget for Labour.

The term ‘Learning Curve’ is widely used, typing the term into a search engine will bring up many examples not related to its use in management accounting – see the four below I got immediately – we are clear that it means you get better as you learn quickly, but what does it mean in accounting terms?

Ageing’s steep learning curve and being “all in”  ChicagoNow
It’s been a huge learning curve. Since turning 50, I’ve been in physical therapy for my shoulder and my knee, had surgery, and been diagnosed with …

MP says survey has been a learning curve  Bundaberg News Mail
MEMBER for Flynn Ken O’Dowd says he’s glad for the 4000 people who completed his recent survey. “The Hot Topics survey officially closed on …

Sarah Harding on Coronation Street: ‘It was a big learning curve’  hellomagazine.com  Sarah Harding has said that her appearance on Coronation Street was a “big learning curve”. The Girls Aloud singer received mixed reviews for her …
Sarah Harding responds to Coronation Street criticism: ‘It was a big learning curve’

Stoke City on tour: Steep learning curve for Potters, but fans were with them every step of the way  Stoke Sentinel  More than 2,000 Stoke City fans travelled to Germany for the Colonia Cup and stuck by their team, despite seeing them lose to Cologne and Porto.

Further Reading

Here’s a skill that benefits from the Learning Curve, surgery. I am sure they get quicker, but the major benefit here is the success of the operation. It’s worth remembering that the Learning Curve isn’t just about labour time, it is also about quality of work getting better, rejects becoming fewer.


Possible Written Questions.

(No indication of marks – the more marks a question gets, the more you are expected to write – detail that is, not just words!) If you can’t answer these, you need to do some more reading. I do ‘find’ questions elsewhere, so these aren’t all questions I have used myself.

What are the differences between the Cumulative Average Model and Marginal Model of the Learning Curve?

If you were the manufacturer of a new product, how would you determine which of the Marginal and Cumulative Average Models of the Learning Curve applied in practice?

What features need to exist for the Learning Curve to apply to a business situation?

Discuss what other potential savings an organisation might expect to make as a consequence of the Learning Curve applying to their production.