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So in the book this subject came under throughput accounting. Do we always calculate throughput instead of contribution and ignore labour costs?
You must be able to apply throughput accounting to a multi-product decision-making problem.
Yes you are correct to calculate throughput and ignore labour costs when doing “throughput”BUT…….
You must also be able to calculate the contribution to sales ratio, in single and multi-product situations, and demonstrate an understanding of its use.
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