ExpertHard2 marksShort Answer
ACCA · Question 17 · Cost Accounting Techniques
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)
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)
How to approach this question
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.
Full Answer
Throughput per unit = $100 - $40 = $60.
Return per bottleneck hour = $60 / 2 hours = $30 per hour.
Factory cost per bottleneck hour = $120,000 / 6,000 hours = $20 per hour.
TPAR = $30 / $20 = 1.5.
Common mistakes
Calculating throughput as $100 / 2 = $50, forgetting to deduct the material cost.
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