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When demand exceeds supply, which one of the following situations would increase the throughput accounting ratio?
Answer) A 5%wage increase linked to an 8% increase in productivity
Sir how would this improve the TPAR?
Pls helpAn 8% increase in productivity would mean that they were producing 8% more units per hour, and therefore the throughput return per hour would increase by 8%.
A 5% increase would increase the factory cost per per hour (almost certainly by less than 5% because labour is only part of the factory cost).
Because the increase in the throughput return per hour is higher than the increase in the factory cost per hour, the TPAR would increase.
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