ExpertMedium2 marksMultiple Choice
ACCA · Question 4 · Throughput Accounting
Section A
SiliconForge manufactures semiconductor chips. The factory has a bottleneck process. The return per factory hour for Chip X is $450. The total factory costs (excluding direct materials) are $1,200,000 per month, and the bottleneck resource is available for 4,000 hours per month.
What is the Throughput Accounting Ratio (TPAR) for Chip X?
Section A
SiliconForge manufactures semiconductor chips. The factory has a bottleneck process. The return per factory hour for Chip X is $450. The total factory costs (excluding direct materials) are $1,200,000 per month, and the bottleneck resource is available for 4,000 hours per month.
What is the Throughput Accounting Ratio (TPAR) for Chip X?
Answer options:
A.
0.67
B.
1.50
C.
2.66
D.
3.00
How to approach this question
Calculate the cost per factory hour by dividing total factory costs by total bottleneck hours. Then divide the return per factory hour by the cost per factory hour.
Full Answer
B.1.50✓ Correct
Cost per factory hour = Total Factory Costs / Total Bottleneck Hours = $1,200,000 / 4,000 hours = $300 per hour.
TPAR = Return per factory hour / Cost per factory hour = $450 / $300 = 1.50. A TPAR > 1 indicates the product generates throughput faster than the factory incurs costs.
Common mistakes
Calculating the inverse ratio (Cost per hour / Return per hour).
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