Question 1

A server hosting company uses throughput accounting. A specific hosting package sells for $100 and incurs $40 in totally variable material (licensing) costs. The package requires 2 hours on the bottleneck server. 
Total factory costs (operating expenses) for the period are $120,000, and total available bottleneck server hours are 6,000.

Calculate the Throughput Accounting Ratio (TPAR) for this package. (Enter to one decimal place)

Accepted Answer

1. Calculate Throughput per unit (SP - Material). 2. Calculate Return per factory hour (Throughput / bottleneck hours per unit). 3. Calculate Factory cost per hour (Total factory cost / Total bottleneck hours). 4. TPAR = Return per hour / Factory cost per hour.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating throughput as $100 / 2 = $50, forgetting to deduct the material cost.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 4

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