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Which one of the following would serve to increase throughput accounting ratio and why?
also explain the points which are not valid.1- an increase in the speed of the fastest machine in the production process
2- an unexpected increase in the factory rent
3- a 5% wage increase linked to an 8% improvement in productivity
4- a 10 % sales discount to stimulate demand by 20 %1 is wrong – the fastest machine is not a bottleneck (by definition!)
2 is wrong – it will increase the cost per factory hour and therefore reduce the TAPR
4 is wrong – demand will not make them able to produce faster.
3 is correct – if they are able to produce faster then the TAPR will reduce (given the improvement is greater than the increase in the cost per factory hour)
(Does not the book in which you found this question not also have the answers? I am puzzled why you are setting me a test 🙂 )
Llx.. 😀 Actually these are the questions from my term tests at college they only provide with solution and no explainations.. But thank you very much Sir for the answers .
One more question
1- Throughput accounting was designed as a decision making tool for situations where there is a bottleneck in the production process.. This is a wrong statement but how is it wrong? :/ seems pretty legit to me.. i m confused.
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