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CMA Final · Strategic Cost Management · Throughput Accounting

Arjun Industries has 2,500 hours of bottleneck machine time. Product A: price Rs 300, material Rs 120, 2 hours per unit, demand 500 units. Product B: price Rs 260, material Rs 80, 3 hours per unit, demand 400 units. Product C: price Rs 200, material Rs 90, 1 hour per unit, demand 600 units. Under throughput accounting, what is the maximum total throughput?

Maximum throughput is Rs 2,10,000. Products are ranked by throughput per bottleneck hour: C Rs 110, A Rs 90, B Rs 60. C (600 units) and A (500 units) are fully met, and the remaining 900 hours make 300 units of B, giving Rs 66,000 + 90,000 + 54,000.

  1. ARs 2,10,000Correct
  2. BRs 1,95,000
  3. CRs 2,28,000
  4. DRs 1,56,000

Explanation

Throughput per hour: A = 180/2 = 90, B = 180/3 = 60, C = 110/1 = 110. Rank C, A, B. C: 600 hrs, 600 x 110 = 66,000. A: 1,000 hrs, 500 x 180 = 90,000. B gets the remaining 900 hrs = 300 units, 300 x 180 = 54,000. Total = Rs 2,10,000. Ranking by throughput per unit gives Rs 1,95,000.

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