CMA Final · Strategic Cost Management · Throughput Accounting
In throughput accounting as taught for CMA Final, which of the following is treated as a truly variable cost when computing throughput?
Raw material purchased from outside suppliers is the truly variable cost in throughput accounting. Throughput is sales less such totally variable costs. Fixed-wage labour, rent, depreciation and supervisors' salaries do not vary with output and are therefore classified as operating expenses or factory cost.
- ADirect labour paid on a fixed monthly wage
- BFactory rent and depreciation
- CCost of raw materials purchased from outside suppliersCorrect
- DSalaries of the supervisors
Explanation
Throughput = Sales revenue minus totally variable cost, which is mainly direct material and bought-in components. Direct labour on a fixed wage, rent, depreciation and supervisor salaries are operating expenses in throughput accounting because they do not vary with output in the short run.
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