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ACCA Applied Knowledge · Management Accounting · Alternative cost accounting principles

A product sells for $50 per unit and uses materials costing $20 per unit. Labour and overhead (factory cost) total $300,000 per period. The product requires 2 minutes on the bottleneck resource, and 150,000 bottleneck minutes are available per period. What is the throughput accounting ratio (TPAR)?

This question was malformed.

  1. A0.50
  2. B1.00
  3. C1.50Correct
  4. D2.00

Explanation

Return per factory hour = (50 - 20)/2 = $15 per minute. Cost per factory minute = 300,000/150,000 = $2 per minute. TPAR = 15/2 = 7.5. Check: this does not match any option, so recompute with minutes: return per minute = 30/2 = 15; cost per minute = 2; TPAR = 7.5.

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