please could you kindly explain why the remaining 100 hrs are divided by 15/60
J
John MoffatTutor·
I assume that you are asking about question 3.
There are 60 minutes in an hour. Each unit takes 15 minutes and so this is 15/60 hours.
L
Laren·
Hi,
In the question #2, the calculation of TAR. I am unclear why budgeted Labour cost of $5 x 100,000 hrs was used instead of Labour cost of $10 to calculate total fixed cost?
J
John MoffatTutor·
The company makes several products. The budgeted labour cost is the budget for the entire company.
B
Boitumelo·
Hi please explain were does the 60 comes from ?
J
John MoffatTutor·
Which question are you referring to?
P
Pragatiesswaran·
hi John, I believe its on question number 3, if not can please explain on the 60 for question 3
J
John MoffatTutor·
It is because there are 60 minutes in one hour.
M
Manveer·
I think you are referring to several questions, the reason why it is divided by 60 is because the time taken are given in minutes. Hence, we divide by 60 minutes to convert to hours.
J
John MoffatTutor·
Yes - it is because they are only budgeting on 100,000 hours of labour.
J
Jelisa·
Hi John,
For question 2 in the calculation which 250,000 is used to arrive at 750,000
Is it the given factory overhead cost 250,000
Or machine time 5,000hrs /0.2hrs = 25,000units x$10 = 250,000?
Why isn't it both, I thought all costs apart from materials is included in cost per factory hour?
Many Thanks
J
John MoffatTutor·
The total factory cost is the total of all costs apart from materials, and so is the labour cost (100,000 x $5) plus the overheads ($250,000).
Machine costs are an overhead and so are already included in the 250,000 (and you are not given the cost of machine time separately anyway!).
J
Jelisa·
Thanks
J
John MoffatTutor·
You are welcome.
N
Nur·
Hello,
I am confused with question 2.
When calculating the throughput contribution per hour of machine time, we are suppose to do 45 / 0.2.
In question 3, when calculating the throughput contribution per hour for X we do 40 / (20/60).
What I don’t understand, is why don’t we calculate qu 2 as:
45 / (0.2/60). Why do we not consider the time taken within a hour period by dividing by 60.
Hope that is clear.
Thank you for your help in advance.
J
John MoffatTutor·
To get the contribution per hour we divide by the number of hours and not the number of minutes.
In question 2 they take 0.2 hours and so we divide by 0.2.
In question 3, X takes 20 minutes. 20 minutes is 20/60 hours and so we divide by 20/60.
N
Natalie·
I got only one correct and need to study much harder for this lecture.
I always mix up with the quantity in unit, hours, and minutes for deriving the return per factory hour.
P
PAUL·
Okay sir, when do we use contribution per unit and throughput per unit??
J
John MoffatTutor·
You always use contributions unless the question specifically refers to throughput accounting.
A
Angelica Amposta·
Hello sir!
For Q3 , I didnt round up/down the time so I got a total of 420 units
If this were not a multiple choice question and I have to type the value, will 420 be considered correct or do I have to round up/down the time?
V
Vidhi Dhakan·
Hi sir, here is my doubt. Alpha. Beta. Gamma
Sales price per unit. $2.00. $2.25. $1.75
Materials per unit. $0.50. $0.81. $0.35
Labour per unit. $0.30. $0.60. $0.50
Machine time per unit:
Assembly ( in min). 2 3. 2.25
Quality control ( in min). 3. 4. 2
Packaging.(in min). 4. 5. 3
Weekly sales demand. 1000 units. 1500 units. 850 units
Operating expense including labour. Are $4000. The maximum hours available for the machine are 150hr(assembly) 170(quality) and 250(packaging)
A). 840 units
B) 1000 units
C) 1375units
D) 1500units
In this question I understand until ranking step than how to get 1375 units???
Can you please explain me.
Thanks in advance
V
Vidhi Dhakan·
Thank u so much
V
Vidhi Dhakan·
Hi sir,
I have doubt in qstn 5 why the answer is A my answer for this question is c because As per my my knowledge labour cost is fixed in short term not material but can you please explain me if I am wrong. I will like to know.
J
John MoffatTutor·
We do assume that all costs (including labour) are fixed except for materials.
This is an assumption that we make, but the question asks which of them are NOT assumptions that we make.
The only assumption listed that is NOT an assumption we make is that all materials are limited.
K
kissme4560·
Thanks scored
100%
J
John MoffatTutor·
Very good :-)
(Although do remember these are just meant to be quick tests to use as you go along. Do make sure that you buy a Revision Kit from one of the ACCA publishers because they contain lots of past exam and exam standard questions (in all the different formats) for practice - practice is vital to passing the exam.)
M
Martin·
Dear John,
I am a bit a confused with Q2. When calculating the 'Cost of Factory Hour', I am not sure why we're using the budgeted labour hours (ie. 100,000*5) rather than actual hours which will be need for the output? We know that we have 5,000 machine hours and one unit needs 0.2hs; therefore, we can manufacture only 25,000 units. Given than the labour cost is $10 per unit, I assumed that the labour cost would be 10*25,000.
I've watched your amazing lectures but did not find an answer to this. Apologies if this has been answered before.
Many thanks in advance,
Martin
M
moeez3·
Dear Martin,
In THROUGHPUT accounting we assume labour cost as fixed cost rather than product cost. As company makes several products. May this help.
Thanks
J
John MoffatTutor·
We assume that labour is a fixed cost in the short-term and so the total labour cost will stay the same as budgeted even if the production changes.
E
Ekta·
Hello Sir,
My answer of question no.3 of throghput revision test is coming a bit different because of the decimal as i converted 20 mins to hrs i.e 20/60=0.3333 which i considered as0.33hrs and 15 mins to 0.25 hrs so product y production is coming to 420.Please comment if i do this way,is it wrong???Thankyou
J
John MoffatTutor·
Although rounding to not usually lose marks, in this case you would get zero because 420 is not one of the choices available. In multiple choice questions in the exam you either get 2 marks or you get 0 marks.
O
okhedr·
Got 80 % : thanks
J
John MoffatTutor·
Well done (but make sure you have a Revision Kit from one of the ACCA approved publishers. They are full of past exam and other exam standard questions, and question practice is vital to passing the exam.)
K
kapa·
Hi John
I am lost. Question 2. Why do we take into consideration budgeted labour hours @$5 when calculating total factory cost? If we have labour cost @10? And I thought that for total factory cost we just need fixed costs? Am I w
J
John MoffatTutor·
In throughput accounting, all costs apart from materials are treated as being fixed costs.
I explain the reason for this in my free lectures and I do suggest that you watch the lectures before attempting the short tests.
U
Urmil·
got 80% , thanks for the amazing questions , i was little confused about last question, from option (b) and (c)
C
Chau·
same to me
M
MohamedSupporter·
Thanks john for these amazing questions. I hope you record a lecture about bottle neck resource but I'm okay with it as I understood the full concept by carefully going through your notes.
J
John MoffatTutor·
I will record a lecture when I have the time. However do note that there is a printed answer to the example at the end of the notes.
A
alikhokhar·
i just confused in through put ratio ratio formula please clear my confuessing i think the option b is correct
J
jonah·
requesting for a lecture about bottlenecks to be added in chapter5
J
John MoffatTutor·
See below.
T
tamunotonye·
There is no lecture for bottleneck resources. Please can this be made available. I really appreciate the lectures. Thanks a lot.
J
John MoffatTutor·
I will record a lecture when I have the time.
However the answer to the example is in the notes and should make sense.
D
deena·
in question 1 we can calculate the throughput either by using through put per unit or through put per factory hour right and in this question both the options are available.
J
John MoffatTutor·
No. The throughput account ratio (which is what this question asks for) is always the throughput return per hour divided by the factory cost per hour.
Did you watch the free lectures on this before attempting the test?
C
chamion·
hi, when calculating return per factory hour, i'm getting my answer as 2.1 as opposed to your 210. please explain
J
John MoffatTutor·
The return is $21 in 6 minutes.
There are 60 minutes in one hour.
Therefore the return per hour is 60/6 x $21
T
tanweerhassan·
Regarding Q3: You have ranked product X based on higher contribution i.e. 120 vs 104, Am I right?
Although, the TPAR of X should be 6 and Y be 6.9. (if we assume there is no other fixed cost)
need guidence sir
J
John MoffatTutor·
I have no idea how you are getting the TPAR's of 6 and 6.9.
In both cases you would divide the throughput contribution per hour by the factory cost per hour, which we don't know but would be the same for both products (since they are made in the same factory). Therefore automatically the product with the highest throughput contribution per hour will always also have the highest TPAR.
Did you watch the free lectures on this before attempting the test?
T
tanweerhassan·
Labour Cost per unit is already included i.e $10 (as fixed cost) then again, it says " Labor budget is 10000 hours @ cost of $5/Hour? why is the contradiction. Please help me understand.
T
tanweerhassan·
I meant Q2 sir
J
John MoffatTutor·
Each unit must take 2 hours of labour. 2 hours x $5 per hour = $10 per unit
M
Mauro·
Hi, I would like you explain me if when you say in Question 2 information, that the overheads are 250.000, this is referred the labour hours? Why are we including budgeted labour hours if we considered before in case the 250.000 referred 25.000 units * $10 labour hour per unit. Why the cost of the Labour hour budgeted is not the same as the real one?
Thanks
J
John MoffatTutor·
Overheads and labour costs are not the same thing!!
The overheads are $250,000 and the labour costs are 100,000 hours at $5 per hour.
Did you watch the free lectures before attempting this test?
N
Natalia·
Hi,
I just want understand why in previous example we used to calculate the return per factory hour as 45/0.2 =$225 and in this example 40/(20/60) =$120
Thank you in advance for response
J
John MoffatTutor·
Question 2 says that each unit takes 0.2 hours.
Question 3 says that each unit takes 20 minutes. There are 60 minutes in a hour, so 20 minutes is 20/60 hours (which is 0.33333 hours).
I
Irakli·
Dear John,
What about the definition of bottleneck resource. I mean in revision kit there are some exercises that include bottleneck but i didn't find anything about it in Chapter 5 lectures nor in examples.
J
John MoffatTutor·
When a product is worked on on one machine, then passes to a second machine and so on, then the bottleneck resource is the slowest machine - the one that is limiting how many units can be produced per hour.
I must add it to the lecture :-)
J
John MoffatTutor·
We do not sell books - we have our free lectures and free lecture notes (which are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well).
The book you need is a Revision Kit and you should buy one from one of the ACCA approved publishers. (If you choose to buy it from BPP then you get a special 20% discount if you click on the link that appears on most of our pages)
W
wwong·
We're can I get more questions to practice? Please
J
John MoffatTutor·
It is essential that you buy a Revision Kit from one of the ACCA approved publishers - they contain lots of exam standard questions to practice, and practice is vital if you are to pass the exam.
R
righan·
these questions are far more easier than the real one ! can not comply with the difficulty of real one after this. so, could you make the level of difficulty of these test quesions close to that of exam?
J
John MoffatTutor·
These are not meant to be as hard as the real exam - they are simply quick tests to check you have understood the lectures for each chapter, and they will not be made harder.
We do have an online mock exam which is made up of exam-standard questions.
However, as stated throughout this website, you cannot possibly hope to pass the exam without buying a Revision Kit from one of the ACCA approved publishers - they are full of exam standard questions.
R
rosemariya·
how do you get the 60 that is you use (50-10)/(20/60)... how do u get that particular 60 ?
R
rosemariya·
for question 3
J
John MoffatTutor·
It is to convert the minutes into hour - there are 60 minutes in an hour.
N
Natalya·
Hello, John!
Regarding your last reply from March 4th:
Why do we use other product's costs to calculate TAR for this product?
J
John MoffatTutor·
We don't, and I haven't used them in my reply!!
Have you watched the free lectures on throughput accounting?
U
umair1994·
None of the quiz is appearing what can I do :( ?
O
opentuition_teamAdmin·
try another device/ or browser
K
kevin·
THANKS FOR YOUR HELP,AM NOW THROUGH WITH THROUGHPUT ACCOUNTING.
J
John MoffatTutor·
You are welcome (but please do not use capital letters) :-)
R
rscjo·
Im sorry I did not say which question - question 1.
R
rscjo·
Hi John, in one of the answer options throughput appears to be misspelt. Thank you for the questions though, they were very helpful.
J
John MoffatTutor·
Thanks for that - I will have it corrected :-)
A
Ansu Koroma·
Thanks for the questions. They are very helpful
J
John MoffatTutor·
I am pleased that you find them helpful :-)
D
Dragana·
Hello,
I have trouble understanding when to use direct labor in calculation (in Q3, 20 for X, 15 for Y)?
In answer you say that you are calculating throughput contribution, but isn't contribution SP-VC ?
There is no highlight that only mat.cost are variable here, and labor fixed.
Thank you in advance,
J
John MoffatTutor·
You need to watch the free lectures on throughput accounting! (There is no point in doing the tests without watching the lectures first.
In throughput accounting we assume that in the short-term all costs are fixed apart from materials.
D
Dragana·
Thank you.
J
John MoffatTutor·
You are welcome :-)
A
alma·
sir can you please tell me how do i solve Q4 ?
Because i couldn't get the right answer
i got 140
J
John MoffatTutor·
The throughput is 30 - 9 = 21 per unit
The time for each unit is 6 minutes, which is 6/60 or 0.1 hours.
Therefore the return per factory hour = 21 / 0.2 = $210
J
jasmine·
How i solve the question 2?
J
John MoffatTutor·
At the moment the questions appear in a random order (which I am going to correct).
But it means that any of the questions could have appeared for you as question 2.
You are going to have to tell me a bit more about the question and then I know which one that you are asking about.
S
Sydney·
how do l solve number 1 above? am getting 300 units. thus the question requiring the number of Y units to be produced
J
John MoffatTutor·
The return per factory hour for X = (50 - 10) / (20/60) = $120
The return per factory hour for Y = (32 - 6) / (15/60) = $104
Therefore they will prefer to produce X.
The most they can produce of X is 1500 units, which takes 1500 x 20/60 = 500 hours
This leaves 100 hours which they will use to produce Y. Each Y takes 15/60 hours, so they will produce 100 / (15/60) = 400 units of Y.
J
jp·
Sir, I calculated this question in minutes as oppose to hours I'm guessing this doesn't matter?
J
John MoffatTutor·
No it doesn't matter - in the exam nobody will look at your workings anyway :-)
All that matters is that you choose the right answer!
S
sundardushy·
Thanks for your help.
Regards
Dushyanth
J
John MoffatTutor·
You are welcome :-)
I
Irene·
Hi john, how to solve this question?
I
Irene·
I meant the question with TAR calculation required.
J
John MoffatTutor·
The throughput is 60 - 15 = $45 per unit
The return per factory hour = 45 / 0.2 = $225
The total of the other costs is 250,000 + (100,000 x 5) = 750,000.
The factory costs per hour = 750,000 / 5,000 = $150
The TAR = 225 / 150 = 1.50
T
thomas84·
But why do the total costs include 100,000x$5. According to the question: 0.2h machine hours are required per unit and 5,000h machine hours, thus there is only the possibility to produce 5,000units. For 1 unit I have $10 labour costs, which mean 2h per unit. If I can only produce 25,000units due to bottleneck of 5,000machine hours, why isn't it then (2h*25,000units*5$=$250,000) instead of $500,000.
Thx
J
John MoffatTutor·
But what about all the other products that we do not know about?!! :-)
This is only one of several products.
P
prati·
But if we calculating the ta ratio for this product why do u need to add the hours for the other products. Even I calculate the ta ratio excluding the 100000 hours
J
John MoffatTutor·
Throughput accounting is only of any relevance when there are several products being produced. The TPAR is comparing the return per hour from each of the products with the total factor cost per hour - not the cost for each product separately. Have you watched my free lectures on this?
There are 60 minutes in an hour. Each unit takes 15 minutes and so this is 15/60 hours.
In the question #2, the calculation of TAR. I am unclear why budgeted Labour cost of $5 x 100,000 hrs was used instead of Labour cost of $10 to calculate total fixed cost?
For question 2 in the calculation which 250,000 is used to arrive at 750,000
Is it the given factory overhead cost 250,000
Or machine time 5,000hrs /0.2hrs = 25,000units x$10 = 250,000?
Why isn't it both, I thought all costs apart from materials is included in cost per factory hour?
Many Thanks
Machine costs are an overhead and so are already included in the 250,000 (and you are not given the cost of machine time separately anyway!).
I am confused with question 2.
When calculating the throughput contribution per hour of machine time, we are suppose to do 45 / 0.2.
In question 3, when calculating the throughput contribution per hour for X we do 40 / (20/60).
What I don’t understand, is why don’t we calculate qu 2 as:
45 / (0.2/60). Why do we not consider the time taken within a hour period by dividing by 60.
Hope that is clear.
Thank you for your help in advance.
In question 2 they take 0.2 hours and so we divide by 0.2.
In question 3, X takes 20 minutes. 20 minutes is 20/60 hours and so we divide by 20/60.
I always mix up with the quantity in unit, hours, and minutes for deriving the return per factory hour.
For Q3 , I didnt round up/down the time so I got a total of 420 units
If this were not a multiple choice question and I have to type the value, will 420 be considered correct or do I have to round up/down the time?
Sales price per unit. $2.00. $2.25. $1.75
Materials per unit. $0.50. $0.81. $0.35
Labour per unit. $0.30. $0.60. $0.50
Machine time per unit:
Assembly ( in min). 2 3. 2.25
Quality control ( in min). 3. 4. 2
Packaging.(in min). 4. 5. 3
Weekly sales demand. 1000 units. 1500 units. 850 units
Operating expense including labour. Are $4000. The maximum hours available for the machine are 150hr(assembly) 170(quality) and 250(packaging)
A). 840 units
B) 1000 units
C) 1375units
D) 1500units
In this question I understand until ranking step than how to get 1375 units???
Can you please explain me.
Thanks in advance
I have doubt in qstn 5 why the answer is A my answer for this question is c because As per my my knowledge labour cost is fixed in short term not material but can you please explain me if I am wrong. I will like to know.
This is an assumption that we make, but the question asks which of them are NOT assumptions that we make.
The only assumption listed that is NOT an assumption we make is that all materials are limited.
100%
(Although do remember these are just meant to be quick tests to use as you go along. Do make sure that you buy a Revision Kit from one of the ACCA publishers because they contain lots of past exam and exam standard questions (in all the different formats) for practice - practice is vital to passing the exam.)
I am a bit a confused with Q2. When calculating the 'Cost of Factory Hour', I am not sure why we're using the budgeted labour hours (ie. 100,000*5) rather than actual hours which will be need for the output? We know that we have 5,000 machine hours and one unit needs 0.2hs; therefore, we can manufacture only 25,000 units. Given than the labour cost is $10 per unit, I assumed that the labour cost would be 10*25,000.
I've watched your amazing lectures but did not find an answer to this. Apologies if this has been answered before.
Many thanks in advance,
Martin
In THROUGHPUT accounting we assume labour cost as fixed cost rather than product cost. As company makes several products. May this help.
Thanks
My answer of question no.3 of throghput revision test is coming a bit different because of the decimal as i converted 20 mins to hrs i.e 20/60=0.3333 which i considered as0.33hrs and 15 mins to 0.25 hrs so product y production is coming to 420.Please comment if i do this way,is it wrong???Thankyou
I am lost. Question 2. Why do we take into consideration budgeted labour hours @$5 when calculating total factory cost? If we have labour cost @10? And I thought that for total factory cost we just need fixed costs? Am I w
I explain the reason for this in my free lectures and I do suggest that you watch the lectures before attempting the short tests.
However the answer to the example is in the notes and should make sense.
Did you watch the free lectures on this before attempting the test?
There are 60 minutes in one hour.
Therefore the return per hour is 60/6 x $21
Although, the TPAR of X should be 6 and Y be 6.9. (if we assume there is no other fixed cost)
need guidence sir
In both cases you would divide the throughput contribution per hour by the factory cost per hour, which we don't know but would be the same for both products (since they are made in the same factory). Therefore automatically the product with the highest throughput contribution per hour will always also have the highest TPAR.
Did you watch the free lectures on this before attempting the test?
Thanks
The overheads are $250,000 and the labour costs are 100,000 hours at $5 per hour.
Did you watch the free lectures before attempting this test?
I just want understand why in previous example we used to calculate the return per factory hour as 45/0.2 =$225 and in this example 40/(20/60) =$120
Thank you in advance for response
Question 3 says that each unit takes 20 minutes. There are 60 minutes in a hour, so 20 minutes is 20/60 hours (which is 0.33333 hours).
What about the definition of bottleneck resource. I mean in revision kit there are some exercises that include bottleneck but i didn't find anything about it in Chapter 5 lectures nor in examples.
I must add it to the lecture :-)
The book you need is a Revision Kit and you should buy one from one of the ACCA approved publishers. (If you choose to buy it from BPP then you get a special 20% discount if you click on the link that appears on most of our pages)
We do have an online mock exam which is made up of exam-standard questions.
However, as stated throughout this website, you cannot possibly hope to pass the exam without buying a Revision Kit from one of the ACCA approved publishers - they are full of exam standard questions.
Regarding your last reply from March 4th:
Why do we use other product's costs to calculate TAR for this product?
Have you watched the free lectures on throughput accounting?
I have trouble understanding when to use direct labor in calculation (in Q3, 20 for X, 15 for Y)?
In answer you say that you are calculating throughput contribution, but isn't contribution SP-VC ?
There is no highlight that only mat.cost are variable here, and labor fixed.
Thank you in advance,
In throughput accounting we assume that in the short-term all costs are fixed apart from materials.
Because i couldn't get the right answer
i got 140
The time for each unit is 6 minutes, which is 6/60 or 0.1 hours.
Therefore the return per factory hour = 21 / 0.2 = $210
But it means that any of the questions could have appeared for you as question 2.
You are going to have to tell me a bit more about the question and then I know which one that you are asking about.
The return per factory hour for Y = (32 - 6) / (15/60) = $104
Therefore they will prefer to produce X.
The most they can produce of X is 1500 units, which takes 1500 x 20/60 = 500 hours
This leaves 100 hours which they will use to produce Y. Each Y takes 15/60 hours, so they will produce 100 / (15/60) = 400 units of Y.
All that matters is that you choose the right answer!
Regards
Dushyanth
The return per factory hour = 45 / 0.2 = $225
The total of the other costs is 250,000 + (100,000 x 5) = 750,000.
The factory costs per hour = 750,000 / 5,000 = $150
The TAR = 225 / 150 = 1.50
Thx
This is only one of several products.