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CMA Final · Strategic Cost Management · Throughput Accounting

Rao Foods Ltd makes two products on a bottleneck machine with 2,400 hours available per month. Product X: price ₹500, material ₹200, bottleneck time 2 hours per unit. Product Y: price ₹420, material ₹120, bottleneck time 3 hours per unit. Demand is unlimited for both. Operating expenses are fixed. Which plan maximises monthly throughput, and what is that throughput?

Make only X, giving throughput of ₹3,60,000. Both products earn ₹300 per unit, but X earns ₹150 per bottleneck hour against ₹100 for Y, so ranking by throughput per constrained hour favours X over the 2,400 available hours.

  1. AMake only X; ₹3,60,000Correct
  2. BMake only Y; ₹3,60,000
  3. CMake only X; ₹2,40,000
  4. DMake only Y; ₹2,40,000

Explanation

Throughput per unit: X = 500-200 = ₹300; Y = 420-120 = ₹300. Per bottleneck hour: X = 150, Y = 100. Make only X: 2,400 hours x 150 = ₹3,60,000. Choosing Y by equal unit throughput ignores the constraint, giving only ₹2,40,000.

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