BPP 2019-2020 (Sec B, Pg 18, qn 65 Corrie)

SSruthi5y ago

Hello sir.. Session from Throughput.My doubt is why they did TPAR using Optimum contribution (80x1200)/80000 instead of taking TpAR=(Contribution/LF)/ (FC per hour). ($80/8 hrs)/(80000). Please advise.

John MoffatTutor5y ago#1

The throughput contribution per hour is the throughout per unit divided by the hours per unit. For X the throughput per unit is 150 - 70 = $80. The hours per unit are 1/1,200 (since they are making 1,200 per hour). Therefore the throughput contribution per hour = 80 / (1/1200) = $96,000. (And think about it, if they are making $80 contribution per unit and they are making 1,200 units per hour, then the total throughout contribution per hour has to be 1,200 x $80 = $96,000.)

SSruthi5y ago#2

Thanks a lot sir.. now understood..

John MoffatTutor5y ago#3

You are welcome :-)

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