Ican 2026 Performance Management Question 2

Viana Nig. Oil palm processing Plant is planning annual turnaround maintenance of the facility that will require facility shut down every three months. The plant management has decided to engage an expert maintenance outfit that will carry out the routine inspection and maintenance every three months. During the first year's operation, the costs of shut- down have been as follows: Quarter Shut-Down Cost I N720,000 2 N576,000 3 N540,000 4 N540,000 The management accountant attempts to forecast maintenance costs for the coming year and on examining the above data, it appears that these costs have been steadily decreasing. The plant engineers have suggested that this is probably due to the fact that the maintenance engineers are becoming more used to the procedures involved and also the fact that the plant itself is gradually settling down, after initial operational problems. If this is the case, an appropriate learning curve could explain the situation which has been observed.