Throroughput Accounting MCQ

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November 26, 2014 at 6:41 pm #213532
allenmendonca
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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?
November 26, 2014 at 7:50 pm #213555
John Moffat
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The answer in BPP is wrong.
All of the choices will effect the throughput accounting ratio.
November 26, 2014 at 8:07 pm #213558
allenmendonca
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Thank you 🙂
November 26, 2014 at 9:14 pm #213596
inn
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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.
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