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Application of Learning curve: Learning curve helps to analyse cost-volume profit relationships during familiarisation phase of product or process to arrive at cost estimates.
It helps in budgeting and profit planning.
It helps in pricing and consequent decision making – e.g. acceptance of an order, negotiations in establishing contract prices etc. with the advantage of the knowledge of decreasing unit cost.
It helps in setting standards in the learning phase.
The learning curve does not apply to very experienced people for the same job, since time taken can never tend to become zero or reduce very considerably after a certain range of output. This is the limitation of the learning curve.
(i) Data entry is a manual job so learning rate theory may be applied. Calculation of inventory is a computerized job. Learning rate applies only to manual labour.
(ii) Learning rate should not be applied to a new process which the firm has never tried before.
(iii) The workers are shifted even before completion of one unit of work. Hence learning rate will not apply.
