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Hi sir
I’v watched your lecture completely and i got all of the topics and cases except the last calculation in your last lecture in throughput accounting
It says the ratio should be more than 1
But i couldnt understand its logic
If it was selling price per u divided by cost per u I could see the logic because selling price covers the costs and its 1 or more than 1 and its ok
But here is profit on costs and it says it should be more than one to cover the costs
I assumed that if the profit or return per hour is 0.5 and cost per hour hour is 2
Answer will be less than 1 but its ok
Because its profit/return and no selling price…I think i misunderstood a part because it doesnt match with your lecture
I’ll be thankful if you help me in this way:)
The throughput return is the selling price per unit less the material cost per unit (which is not the profit). This has to be more than the other costs (which are assumed to be fixed), if there is to be a profit.
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