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A very good afternoon to you sir,
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Here is the question :Here is my understanding,
cont p.u.. = SP p.u.. – VC p.u..
Throughput cont p.u.. = Sales rev – VC p.u..(Which is just the material costs)
finding this is no big deal, since the question asked cont p.u.. i did cont p.u.. but the answers given behind the revision kit shows them calculating throughput cont p.u..My questions
1 : Am i suppose to calculate contribution or throughput contribution?
2 : What am i not seeing in the question that prompts me to take the next steps as far as solving the question goes?Please do not post copies of questions online – it is breach of copyright (and that is why I have deleted your links). It is in the BPP Revision Kit, so in future just give either the name of the question or the number of it, and I will find it.
Your understanding is correct.
However the question asks for the contribution and that is what the answer has calculated. The answer certainly does not calculate the throughput calculation – it calculates the sales less the variable costs!!
If you are asked a throughput question then it will be specified that it is throughput (and anyway, throughput is only relevant when it is factory time that is limited – not when materials are limited).
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