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Throughput Accounting

Forums › ACCA Forums › ACCA PM Performance Management Forums › Throughput Accounting

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • July 17, 2020 at 4:19 am #577038
    Nikitagarwal
    Participant
    • Topics: 154
    • Replies: 147
    • ☆☆☆

    Question – After manufacture, each heater has to go through three processes:
    ‘Assembly’, ‘Quality Control’ and ‘Packaging’. The following
    information is available for the three heaters:
    Alpha Beta Gamma
    Sales price per unit $2.00 $2.25 $1.75
    Direct materials cost per unit $0.50 $0.81 $0.35
    Direct labour cost per unit $0.30 $0.60 $0.50
    Machine time per unit:
    Assembly (in minutes) 2 3 2.5
    Quality Control (in minutes) 3 4 2
    Pa After manufacture, each heater has to go through three processes:
    ‘Assembly’, ‘Quality Control’ and ‘Packaging’. The following
    information is available for the three heaters:
    Alpha Beta Gamma
    Sales price per unit $2.00 $2.25 $1.75
    Direct materials cost per unit $0.50 $0.81 $0.35
    Direct labour cost per unit $0.30 $0.60 $0.50
    Machine time per unit:
    Assembly (in minutes) 2 3 2.5
    Quality Control (in minutes) 3 4 2
    Packaging (in minutes) 4 5 3
    Weekly sales demand 1,000 units 1,500 units 850 units

    Operating expenses, including labour, are $4,000. The maximum
    hours available for the machines are 150 hours (Assembly), 170
    hours (Quality Control) and 250 hours (Packaging).

    As per the answer : The ‘Assembly’ hours needed for maximum production are 143.75.
    This is less than the 150 hours available. The ‘Quality Control’ hours
    needed for maximum production are 178.33, which is greater than
    the 170 hours available. So, ‘quality control hours’ is the limiting
    resource/bottleneck. The ‘Packaging’ hours needed for maximum
    production are 234.17. This is less than the 250 hours available.

    My Question is how did they calculated this max production like 143.75?

    July 17, 2020 at 8:37 am #577051
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You know what the weekly sales demand is, and you know the assembly time per unit.

    Therefore the time needed for maximum production is:

    ((1,000 x 2) + (1,500 x 3) + (850 x 2.5)) / 60 = 143.75 hours

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    Posts
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