Skip to content

ACCA Applied Skills · Performance Management · Throughput accounting

Marlow Co makes products A and B using a single bottleneck machine. A: selling price $90, materials $30, machine time 4 minutes. B: selling price $70, materials $20, machine time 2 minutes. Other costs are treated as factory costs. Which statement is correct when ranking the products?

Product B ranks first, earning $25 of throughput per bottleneck minute against $15 for A. B's throughput of $50 divided by 2 minutes beats A's $60 divided by 4 minutes, so the ranking must use throughput per unit of the scarce resource.

  1. AA ranks first, with throughput of $15 per minute
  2. BB ranks first, with throughput of $25 per minuteCorrect
  3. CB ranks first, with throughput of $50 per minute
  4. DA ranks first, with throughput of $60 per minute

Explanation

A throughput = 90-30 = $60, divided by 4 minutes = $15 per minute. B throughput = 70-20 = $50, divided by 2 minutes = $25 per minute. B ranks first. The $50 option fails to divide by bottleneck minutes.

Did you get it right without looking?

One question tells you little. A timed set on Throughput accounting shows your real accuracy, how long you take and where you lose marks.

Practise Throughput accountingFree diagnostic mock

More Throughput accounting questions