Throughput accounting query — OpenTuition Forums

Uu7c8612y ago

Hi, Please can you help me - Im doing a question from 2013 Kaplan interim assessment no2. It is a multi-product throughput question.(Merta Ltd). Mixing hours is a constraint on production with only 5000 hours available in the quarter. To find throughtput it requires 'cost per mixing hour' as part of the calcs - for the numerator to find Total Factory costs it adds total ANNUAL overhead cost to the quarterly labour costs (5000 mixing hours @10 each) and divides this by the total mixing hours available (5000 <the available hours for quarter again) My question is why do we use annual fixed overheads and only quarterly figures for labour / total bottleneck resource. Why not divide the fixed overhead cost by 4 before adding it to labour cost in quarter. Please can you help - There are a number of us stuck on this point & we've looked everywhere for the answer!! Kind Regards

Uu7c8612y ago#1

I have watched but I think Ive missed why the annual costs are used because in that example its fixed cost per unit rather than an annual total. Sorry if im being dumb - Im totally foxed!! :)

John MoffatTutor12y ago#2

In the question I have for Merta, the other fixed overheads are given as $224,000 per quarter (not per year) and they have used this correctly in the answer. Maybe you have a different version, but certainly in the copy that I have they give the fixed overheads per quarter (not the annual fixed overheads).

Uu7c8612y ago#3

Thank you loads for your help - looks like it is a printing error. Please can you tell me where I might obtain your version of the MERTA ltd question / model answer? Kind Regards

John MoffatTutor12y ago#4

I got it from En-gage on the Kaplan website.

SSteven10y ago#5

Hi sir, i tried looking up for the answer online but I can't find it. somehow I am getting a TPAR of <1 and when doing the optimum qties the amounts added together are less than the factory costs resulting in a loss - can you suggest things I can check?

John MoffatTutor10y ago#6

But if you have paid Kaplan for the question then you must also have the answer. Ask me which part of the answer you are not clear about and I will try and help, but please don't expect me to provide you with a full model answer.

MMuideen10y ago#7

My question is not on this topic please. sometime ago you recommend some management accounting text books. i try to remember the names but i couldn't. i don't know the are on this site where i can locate it. Kindly detail me about the book.

John MoffatTutor10y ago#8

In future please start a new thread when it is a new topic - this obviously has nothing to do with Throughput Accounting. I have never recommended a management accounting text book. We have our own free Lecture Notes on this website which are to be used with our free Lectures. If you want a Study Text as well then you should buy one from one of the ACCA approved publishers.