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Dear John :
Examiner answer of Specimen exam from Sep 2016 (Section A MCQ#13) is A (1.33).
What’s wrong with my calculations :
1st method:
return per factory hour = (130-50)/(12*5)=4/3
cost per factory hour= (130-50-40)/(12*5)=2/3
TARP=4/3:2/3=22nd method:
return per factory hour=(130-50)/4hrs=$20
cost per factory hour= (40*150)/(10*12*5)=$10
TARP=20/10=2thanks in advance
I don’t know why you have done it two different ways, and also the examiners answers show the correct workings!
The throughput per unit = 130 – 50 = 80.
The hours per unit = 4
Therefore the return per hour = 80/4 = 20.The total factory costs = 150 x (40 + 20) = 9,000
The total hours available = 10 x 12 x 5 = 600
Therefore the cost per factory hour = 9,000 / 600 = 15Therefore the TAR = 20 / 15 = 1.33
I do suggest that you watch my free lectures on throughput accounting.
Our lectures are a complete course for Paper F5 and cover everything needed to be able to pass the exam well.
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