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The question is :
A company can produce a wide variety of products but its production plans are limited by the time available on Machine M. The budgeted time available for the next period for Machine M is 12,000 hours. The overheads for the next period are budgeted to be $216,000. The company is reviewing the production plans for Product X. The product sells for $8 per unit and incurs material costs of $2 per unit and labour costs of $4 per unit. Each unit of Product X is worked on by Machine M for 10 minutes.sir…first of all, TPAR= return per factory hour/ cost per facotry hour right? which is,
contribution/ time taken on the constraint (/) factory cost / total time taken..
what i did was, plz explain sir, im confused on taking the hours here??I think it’s
Return = 8-2= 6 * 60/10
Cost = 216000 / 12000 + (4 * no of units?)
TPAR = Return ph / Cost ph
sir, tell me why is this wrong,
return per factory hr= ((8-2)/.167( since its 10mins, converted to hours)
cost per factory hour= 216000/12000=18+0.067 ( 4mins labour time in hours)
tpar=1.99sir, plz correct my errors*
I need to have a look at this question to make sure you haven’t missed something.
Where is it from?sir, i found it from the forums and it seemed to be a question i feel stuck..pretty sure thats the whole question. thank you sir
The cost per factory hour is the total of all costs other than the material, and so is the total of the overheads and the labour.
The overheads per hour are 216,000/12,000 = $18. The labour cost per hour is 4 x 60/10 = $24. Therefore the total cost per factory hour is 18 + 24 = $42.
The return per factory hour is (8 – 2) x 60/10 = $36.
Therefore the TPAR = 36/42 = 0.857
sir, why is it 60/10? if we are converting mins into hours..it has to be 10/60 right? and also why are we multiplying the time in return per factory hour. thank you for your precious time sir>
sir, is my understanding correct…they tell, each units takes 10mins, therefore in an hour we can make 6 units, each unit is $4 so, its $24?
And also sir, why is the contribution* 60/10? i didnt only undersatnd thatAs I said above
Everything is per hour so
The cost per factory hour is the total of all costs other than the material, and so is the total of the overheads and the labour.
The overheads per hour are 216,000/12,000 = $18. The labour cost per hour is 4 x 60/10 = $24
Therefore the total cost per factory hour is 18 + 24 = $42.
The return per factory hour is (8 – 2) x 60/10 = $36.
Therefore the TPAR = 36/42 = 0.857
sir, what i dont understand is, why is it 60/10 and not 10/60? plz sir! im stuck in a vey silly thing ..
As I have said numerous times it is a rate per hour
Return ph
Cost ph
TPAR = Return ph / Cost phThe return per factory hour is (8 – 2) x 60/10 = $36.
Because there are 60 minutes in an hour and X is worked on for 10 minutes so you have to * by 6
I can’t say this again
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