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Dear sir,
Could you kindly explain me:
We have 2 services: “cut”(capability 7200h) and “treatment”(capability 4800 h);
total cost -306 400$
For calculating TPAR for “cut” we use:
Cost for bottleneck hour: 306 400/7200=42.56
And also we use this amount(42.56) in calculating TPAR for “treatment”.
Why do we use 42.56 for calculating TPAR for “treatment”?
Why don’t we use 306 400/4800= 63.83?Thanks for your attention
Because even though it is a hairdresser, it is still the same principle as if it were a factory producing two products.
For the factory cost per hour, we need to use the total costs (excluding materials) of the whole factory. That is the whole point of throughput accounting.My free lectures on throughput accounting will help you. The lectures are a complete course for Paper F5 and cover everything needed to be able to pass the exam well.
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