CMA Final · Strategic Cost Management · Throughput Accounting
Sharma Components Ltd sells a product at Rs 900 per unit. Direct material cost is Rs 400 per unit, direct labour is Rs 150 per unit and factory overheads are Rs 100 per unit. Under throughput accounting, what is the throughput per unit?
Throughput per unit is Rs 500, found by deducting only the truly variable direct material cost of Rs 400 from the selling price of Rs 900. Labour and overheads are treated as operating expenses in throughput accounting, so they are not deducted.
- ARs 500Correct
- BRs 350
- CRs 250
- DRs 750
Explanation
Throughput = sales price minus totally variable cost, which is direct material only. 900 - 400 = Rs 500. Rs 350 wrongly deducts labour as well, and Rs 250 deducts labour and overheads as well.
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.
More Throughput Accounting questions
- 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…
- Under throughput accounting as used in Theory of Constraints, which one of the following costs is treated as a truly variable cost when comp…
- Ranjit Auto makes component K in-house using Rs 60 of material and 3 bottleneck hours per unit. A supplier offers K at Rs 150 per unit. Any …
- 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. P…
- In throughput accounting, as used in Strategic Cost Management, throughput contribution of a product is defined as:
- Under the theory of constraints, after the bottleneck has been fully exploited and subordinated to, what is the next step in the five focusi…