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„Reducing the machine time per unit will increase throughput per hour and factory cost per hour by the same proportion leaving TA ratio unchanged.” This is an answer to Q15 in Revision Kit. I’d be very grateful for a simple example showing how the throughput/hr and the factory cost/hr changes in the same proportion in such a case so that TA ratio stays the same. Thank you!
They will not reduce by the same proportion and the answer is wrong.
Reducing the machine time per unit will increase the TA ratio.
(The throughput return will increase because the time per unit is lower. The total hours available will not change and therefore the cost per factory hour will not change.)
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