Which one of the following situations would increase the throughput accounting ratio?
1 - an increase in the speed of the fastest machine in the production process.
2- an unexpected increase in the factory rent.
3- a 5% WAGE increase kinked to an 8% improvement in productivity.
4-a 10% sales discount to stimulate demand by 20%.
The answer is point 3 i did not understand why?
I understand the point 1 cannot be because TPAR focuses on slowest machine means what’s the bottleneck .
2 point we have to reduce the cost to increase TA.
4 point we have to increase sales to increase TA.
Could u explain why point 3 is the answer.
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Throughput accounting
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I know that improve the productivity of the bottleneck will increase throughput accounting ratio.
But what’s this 5% WAGE increase linked to an 8% improvement in productivity???
I want to ask one another question-
When calculating TPAR in an question it’s taken material purchased instead material used
Why??
6y ago#4One way of getting workers to work faster is to pay them more wages. So the two may be linked.
Throughput accounting assumes that inventories are kept to a minimum (ideally to zero).
God bless u always sir .
6y ago#6You are welcome :-)
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