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Thanks for the lectures, Sir John.
Since, under throughput, we are assuming that labour cost is also part of fixed cost, does this then mean that the limited resource in any throughput scenario question can only ever be machine hours?
What about key factor? Couldn’t the limited resource be either of labour or machine hours?
If so, how do we determine which one will be the limited resource in a situation where the question does not specify. In your first example for instance, isn’t it possible that labour hours might be the limited resource? Why machine hours?
With key factor analysis, the limiting factor can be anything – labour hours, machine hours, materials.
with throughput analysis then strictly it is machine hours (although occasionally questions have it as machine hours which isn’t strictly correct).
In the exam it will specify if throughput accounting is to be used. If not specified then it is key factor analysis.
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