ExpertMedium2 marksShort Answer
ACCA · Question 4 · Specialist cost and management accounting techniques
Section A
SolarTech manufactures solar panels. The factory has a total operating cost of $120,000 per week and operates for 4,000 hours per week.
Product X has a selling price of $150 and direct material costs of $70. It takes 2 hours of factory time to produce one unit of Product X.
Calculate the Throughput Accounting Ratio (TPAR) for Product X. (Enter your answer to two decimal places)
Section A
SolarTech manufactures solar panels. The factory has a total operating cost of $120,000 per week and operates for 4,000 hours per week.
Product X has a selling price of $150 and direct material costs of $70. It takes 2 hours of factory time to produce one unit of Product X.
Calculate the Throughput Accounting Ratio (TPAR) for Product X. (Enter your answer to two decimal places)
How to approach this question
1. Calculate Return per factory hour: (Selling Price - Material Cost) / Time per unit.
2. Calculate Cost per factory hour: Total factory costs / Total factory hours.
3. TPAR = Return per factory hour / Cost per factory hour.
Full Answer
1. Throughput per unit = $150 - $70 = $80.
2. Return per factory hour = $80 / 2 hours = $40 per hour.
3. Cost per factory hour = $120,000 / 4,000 hours = $30 per hour.
4. TPAR = $40 / $30 = 1.333... rounded to 1.33.
Common mistakes
Forgetting to divide the throughput per unit by the time taken to get return per hour.
Practice the full ACCA PM — Performance Management Practice Exam 6
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