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Question no 80 ob Bpp kit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Question no 80 ob Bpp kit

  • This topic has 1 reply, 2 voices, and was last updated 8 months ago by John Moffat.
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  • October 21, 2021 at 4:48 pm #638726
    hm1995
    • Topics: 39
    • Replies: 8
    • ☆

    Hello

    Question 80 asks:
    A Co needs to decide whether to base its decisions about optimum levels of production using a throughput accounting approach, or a limiting factor approach.
    Which of the following is an example of an advantage of choosing a throughput
    accounting approach?
    ? The throughput accounting approach eliminates employee idle time.
    ? The throughput accounting approach eliminates bottlenecks in manufacturing.
    ? The throughput accounting approach eliminates the cost of holding inventory.
    ? The throughput accounting approach is more suitable for short-term decision making than limiting factor analysis.

    And the answer is: The throughput accounting approach is more suitable for short-term decision making than limiting factor analysis.

    I do not understand the statement. I needed an explanation of what it meant to say. How is it more suitable for short term decision making than limiting factor?

    October 21, 2021 at 5:17 pm #638732
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49601
    • ☆☆☆☆☆

    Have you watched my free lectures on throughput accounting?

    As I state in my lectures, throughput accounting assumes that all costs except for materials are fixed in the short term. In the long-term costs such as labour will not be fixed, but in the short-term they will be (and I discuss examples of what is meant by this in my lectures).

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