CMA Final · Strategic Cost Management · Throughput Accounting
Gupta Foods has a bottleneck of 1,800 hours. Product X earns throughput Rs 240 per unit using 2 bottleneck hours; Product Y earns Rs 270 per unit using 3 hours. Demand is 600 units of X and 500 units of Y. Operating expenses are Rs 1,20,000. What is the maximum net profit?
Maximum profit is Rs 78,000 (throughput Rs 1,98,000 less expenses Rs 1,20,000), which is not offered, so the question is flawed.
- ARs 1,20,000Correct
- BRs 1,08,000
- CRs 1,44,000
- DRs 96,000
Explanation
Per hour: X = 120, Y = 90. Make X 600 units using 1,200 hours. Remaining 600 hours make 200 units of Y. Throughput = 600x240 + 200x270 = 1,44,000 + 54,000 = 1,98,000. Less operating expenses 1,20,000 = Rs 78,000. This is not among the options.
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