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PM Chapter 5 Questions Throughput accounting

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  1. 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

    • 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?

  2. 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.

      • 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

      • 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?

  3. 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

  4. 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.

    • 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 馃檪

    • 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)

  7. 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?

    • 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.

  15. 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,

    • 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.

    • 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.

      • 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

      • 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

      • 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

      • 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?

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