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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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Linked
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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???
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I want to ask one another question-
When calculating TPAR in an question it’s taken material purchased instead material used
Why??One 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).
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God bless u always sir .
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