When machine time is a binding constraint with production output, which one of the following will have no effect on the Throughput accounting ratio?
a) Obtaining a lower purchase price for the materials of the product
b) Reducing factory costs
c) Reducing machine time per unit to make the product
d) Increasing the selling price of the Product
The answer selected in the revision kit is (C) could someone explain why?
Ask the Tutor ACCA PM
Throroughput Accounting MCQ
11y ago#1The answer in BPP is wrong.
All of the choices will effect the throughput accounting ratio.
Thank you :)
Reducing machine time per unit will affect returns per hour and cost per hour in same proportion, and so will not affect TPAR. Remeber, TPAR=Return per factory hour ÷ Factory cost per hour. Does it help? Plz let me know.
Sign into reply to this topic.