PM – Kaplan question 250.4 – Throughput accounting

This topic has 2 replies, 2 voices, and was last updated 2 years ago by LeylaA.

Viewing 3 posts - 1 through 3 (of 3 total)

Author

Posts
October 15, 2023 at 2:04 pm #693280
LeylaA
Participant
- Topics: 10
- Replies: 8
Why in calculation when we need to find additional profit earned from hiring new oven, from selling price we subtract only material cost (2,0$-0,25$) and not other costs as well 2,0$-(0,25$+0,5$+0,3$)?

As I understood, we subtract only material cost when find throughput, and not net profit.

Kindly asking you to advice for the above mentioned case.
October 15, 2023 at 7:42 pm #693329
IAW3005
Keymaster
- Topics: 4
- Replies: 1625
This is throughput
I have explained this previously only material costs are considered variable …………
So selling price of $2 – 0.25 mats only

Can I ask you to watch the video again please

Currently Baking has 1,440 minutes available.
This is for 3 ovens, and so 1 more oven will give them 1,440/3 = 480 more minutes.
Therefore they can produce 480/120 = 4 more batches of C, which is 4 x 20 units.
Therefore they will make 80 x (2 – 0.25) = $140 more profit.
The oven costs $45, so the net increase = 150 – 45 = $95.
October 15, 2023 at 9:29 pm #693336
LeylaA
Participant
- Topics: 10
- Replies: 8
I understand that only material costs are considered as variable, but in question they’ve asked to find profit, as I understood, that’s why I wanted to clarify this point.
Author

Posts

Viewing 3 posts - 1 through 3 (of 3 total)

You must be logged in to reply to this topic.