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CD plc produces a single product, the BC, which passes through three different processes, Alpha, Beta and Gamma. The throughput per hour of the three processes is 25, 30 and 32 units of BC respectively. The organisation operates for ten hours a day, 5 days a week for 50 weeks of the year. The BC can be sold for $420 per unit and it has a material cost of $170 per unit. It is anticipated that annual conversation cost will be $1800000.
What is the throughput accounting ratio per day? (to 2 decimal places)
My answer is this.
Throughput return per hour = (420-170)*25 (25 units per hour BC is the bottle neck process). So I got $6250 as my answer.
Cost per factory hour = $720 {(1800000/(10*5*50)}
TPAR = 8.68 (6250/720).
Is this calculation correct?
Why are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA approved publishers – they have answers and explanations.
It would seem that your calculations are correct 🙂
This question was taken from BPP study text’s question bank. This is question 31 of the section A questions. My final answer is same as them, but the way I did the calculation is different. Here is how they did this question.
Throughput return per day is $(420-170)*250 = $62500
Concersation cost per day is {1800000/(5*50)} = $7200
Throughput accounting ratio = $62500/$7200 = 8.68.
I want to clarify whether my calculation is correct even though it get’s a same answer with a different way. I don’t know why they only multiply 5 by 50 to get conversation cost per factory hour. The question asks to calculate TPAR per day, so why are they not considering 10 hours for cost per factory hour calculation?
It makes absolutely no difference – multiplying the top and bottom of the calculation does not affect the result.
In the exam you get the marks regardless of how you went about the calculation.
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