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PM Chapter 5 Questions Throughput accounting

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  1. 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

  2. Hi John,

    I have been watching and learning from your lectures for 4 now and truly appreciate them. How come the $10 per unit is not considered in the answer for Q2? I added $10 * (5000 / 0.2 hr) = 250,000 which I have included as part of my total factory costs. To the point and answer you mentioned for mvokoun (June 2 2020), is this because the $10 is part of product cost rather than factory cost?

  3. 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鈥檛 understand, is why don鈥檛 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.

    • 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.

  6. 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?

  7. 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

  9. 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.

    • 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.

    • Very good 馃檪

      (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.)

  11. 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

  12. 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

    • 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.

    • 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.)

  14. 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

    • 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.

    • 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?

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