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How could a 5% wage increase linked to an 8% improvement in productivity improve throughput accounting ratio. What if the 5% wage rise is of a higher amount of wages and consequently in nominal terms the wage cost increase by more than the 8% improvement in productivity because 8% improvement is of a smaller number of units.
Why would a 10% sales discount to stimulate demand by 20% would not improve the throughput accounting ratio
The throughput return is not affected by the wages cost and would increase because the improvement in productivity means the the time taken per unit is reduced.
The cost per factory hour will increase due to the wages increase, but since increases at a lower rate than the productivity, the TAR will improve.The sales discount will reduce the throughput return and therefore the TAR. Higher demand will not affect the time taken per unit.
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