Question 1

A factory uses throughput accounting. Product X sells for $120. Material costs are $40 per unit. The bottleneck resource is machine time, and Product X takes 2 hours on the bottleneck machine. Total factory costs (excluding materials) are $100,000 per week, and the bottleneck machine is available for 4,000 hours per week.

What is the Throughput Accounting Ratio (TPAR) for Product X?

Accepted Answer

1. Calculate throughput per unit (Sales - Materials). 2. Calculate return per bottleneck hour (Throughput / Hours per unit). 3. Calculate factory cost per bottleneck hour (Total factory costs / Total bottleneck hours). 4. TPAR = Return per hour / Cost per hour.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Deducting labor costs to find throughput. In throughput accounting, only materials are considered truly variable.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 2

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