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Which TWO of the following actions would increase a product’s throughput accounting ratio (TPAR), from one year to the next?
A Removing settlement discounts currently being offered to businesses that buy the product
B Agreeing a less than expected annual pay rise for the factory staff
C Removing trade discounts being offered on the product
D Increasing the capacity of the business by working a longer daySir the answers are C and D. C I understand but am failing to understand why D could be the answer. If the no.of hrs worked increases, costs per factory hr will go down, but return per factory hr will also go lower, right? Unless the productivity also increase there seems to me no chance how working longer could increase TPAR?
Thanks in advance!
If they work a longer day then they will produce more (that is why answer D refers to increasing the capacity).
Sir but even if they produce more throughout per unit should remain constant. And if factory hrs are increased then throughout per factory hr and consequently the TPAR ratio
The throughput return per hour will stay the same.
The cost per factory hour will fall (because more hours are being worked).
Therefore the TPAR will increase.
Oh so throoughput per hr would remain the same as return is divided by bottleneck hrs and cost per hr is divided by factory hours, and becuase it is the latter which is getting increased TPAR will increa?
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