ExpertMedium2 marksShort Answer
ACCA · Question 5 · Specialist cost and management accounting techniques
Section A
Artisan Bakes produces a specialty sourdough bread. The bottleneck resource is the fermentation room.
Selling price per loaf: $8.00
Direct material cost per loaf: $2.00
Total factory costs (excluding materials) per day: $1,200
Time required in fermentation room per loaf: 0.5 hours
Total fermentation room hours available per day: 200 hours
Calculate the Throughput Accounting Ratio (TPAR) for the sourdough bread. (Enter your answer to two decimal places)
Section A
Artisan Bakes produces a specialty sourdough bread. The bottleneck resource is the fermentation room.
Selling price per loaf: $8.00
Direct material cost per loaf: $2.00
Total factory costs (excluding materials) per day: $1,200
Time required in fermentation room per loaf: 0.5 hours
Total fermentation room hours available per day: 200 hours
Calculate the Throughput Accounting Ratio (TPAR) for the sourdough bread. (Enter your answer to two decimal places)
How to approach this question
1. Calculate Throughput per unit (Selling Price - Material Cost). 2. Calculate Throughput per bottleneck hour. 3. Calculate Factory cost per bottleneck hour. 4. Divide Throughput per bottleneck hour by Factory cost per bottleneck hour.
Full Answer
1. Throughput per unit = $8.00 - $2.00 = $6.00.
2. Return per factory hour (Throughput per bottleneck hour) = $6.00 / 0.5 hours = $12.00 per hour.
3. Cost per factory hour = $1,200 / 200 hours = $6.00 per hour.
4. TPAR = Return per factory hour / Cost per factory hour = $12.00 / $6.00 = 2.00.
Common mistakes
Forgetting to divide the throughput per unit by the bottleneck time, or calculating factory cost per unit instead of per hour.
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