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Throughput using marginal costing principles

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Throughput using marginal costing principles

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
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  • January 31, 2018 at 4:53 am #434109
    princessjosephine21
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    Hello sir, can you help me with below question?
    I’m not sure how to get bottleneck hours amount.

    A company manufactures two products, product x and product y using same machines. Sales demand exceeds the machine capacity. Potential sales demand for product x 8000 units and product Y 12000 units. Maximum capacity in the production department is 32000 hours in each period.

    product x product y
    Sales price 22 27
    DM 10 9
    DL and Variable OH 6 11
    Contribution p.u 6 7
    Machine hours p.u 1.5 hours 2 hours

    Fixed costs in each period are $90,000.00.

    (a) Using marginal costing principles, calculate the profit maximizing output in each period, and calculate the amount of profit.

    January 31, 2018 at 10:50 am #434165
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54696
    • ☆☆☆☆☆

    The question as you have typed it is not a question on throughput accounting at all.

    It says ‘using marginal costing principles’, which means to use normal key factor analysis (which I explain in my free lectures on throughput accounting – I do an example first using key factor analysis, and then afterwards using throughput accounting).

    So it is not a question of finding bottleneck hours, but the limit on hours is certainly needed and is given in the question as being 32,000 hours.

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