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Dear Lisa/John,
Hope you are doing well.
Having tried to practice Q57 from the A section from the Kaplan exam kit the suggested answer does not make sense to me. In the suggested answer the TP per hour is calculated as :
TPC/unit divided by hrs
In the question we are also provided with Labour costs. Wasn’t this supposed to be used in the calculation looking something like :
TPC/unit (÷) hrs divided by OHC(other factory costs)(÷)hrs.
Thank you,
Gabi
Throughput is selling price less material costs
Quite simply:
All other costs are assumed to be fixed in the short run.
It is based on a concept similar to contribution but it views only the materials cost as truly variable, simplifying the decision-making process regarding production and sales.Thank you,Lisa. So in this case I was only required to calculate the TP/unit based on the scarce resource as opposed to the TP ratio
Yes
Just to be clear……The calculation of throughput per hour can vary depending on the approach used the calculation is done by dividing the throughput contribution per unit by the hours.
In some situations, other factory costs, such as labour costs, may also be considered in the calculation. This alternative method takes into account the total factory cost, including labour costs, and divides it by the total hours available on the key resource.
Both methods can be used to calculate throughput per hour, but the specific approach may vary depending on the context and the information provided in the question.
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