Easy2 marksShort Answer
Specialist Cost and Management Accounting TechniquesThroughput AccountingLimiting FactorsSyllabus Area B
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Section B - Case 1: AeroBlade Dynamics

AeroBlade Dynamics manufactures heavy wind turbine blades. They produce two models: Standard and Advanced. The factory operates a highly specialized molding machine which is the bottleneck resource. Total bottleneck hours available per month are 3,000 hours. Total factory costs (excluding direct materials) are $120,000 per month.

Data per unit:
Standard Blade: Selling Price = $200, Direct Material Cost = $80, Machine Hours = 2 hours.
Advanced Blade: Selling Price = $350, Direct Material Cost = $150, Machine Hours = 4 hours.

Calculate the Return per Factory Hour for the Advanced Blade. (Enter the number only)

ACCA · Question 17 · Specialist Cost and Management Accounting Techniques

Section B - Case 1: AeroBlade Dynamics

AeroBlade Dynamics manufactures heavy wind turbine blades. They produce two models: Standard and Advanced. The factory operates a highly specialized molding machine which is the bottleneck resource. Total bottleneck hours available per month are 3,000 hours. Total factory costs (excluding direct materials) are $120,000 per month.

Data per unit:
Standard Blade: Selling Price = $200, Direct Material Cost = $80, Machine Hours = 2 hours.
Advanced Blade: Selling Price = $350, Direct Material Cost = $150, Machine Hours = 4 hours.

Calculate the Cost per Factory Hour for AeroBlade Dynamics. (Enter the number only)

How to approach this question

Cost per factory hour = Total Factory Costs / Total Bottleneck Hours available.

Full Answer

Cost per Factory Hour = Total Factory Costs / Total Bottleneck Hours = $120,000 / 3,000 hours = $40 per hour.

Common mistakes

Adding direct material costs to the total factory costs before dividing.

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