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John Moffat.
John Moffat.-
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toushiga
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Hello Tutor,I have a question about the Throughput accounting and the question is in the BPP textbook Quick Quiz Section.
Q: The theory of Constraints is an approach to production management,which aims to maximise sales revenue less :
A. Variable overhead costs
B. All production costs
C. Material costs as throughput
D. Material and variable overhead costsAnd the Answer is D, but Why not C?
Hope you can help me to clarify the answer for me and I will appreciate it, Thank you so much. 🙂
John Moffat
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This is a bit unfair of BPP in that the theory really relates to throughput accounting and for throughput accounting we assume that the only truly variable cost is materials, which would therefore make C the correct answer.
In BPP’s defence, that is an assumption we generally make but is not always going to be true – we should consider all truly variable costs (but only if they really are variable).
toushiga
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