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Throughput return

This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.

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March 9, 2021 at 2:12 pm #614052
Sourav9271
Participant
- Topics: 164
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Hello Sir,
I just came across a question whereby inorder to derive throughput return the materials purchase was deducted from sales..
I thought we have to deduct the materials used..
What would be the underlying reason behind this?
March 9, 2021 at 3:37 pm #614063
John Moffat
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- Topics: 57
- Replies: 54835
It is because throughput accounting does assume that the business is using a just-in-time inventory system, and in this case (in the short term) the purchases and the usage will be the same.
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