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  • Throughput Accounting Ratio: 1462500 2362500 Bottleneck Process

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    Farman Shaikh
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    The document contains calculations for a throughput accounting ratio (TPAR) for three products (A, B, C) at a factory with a bottleneck pressing process. It shows the throughput contribution and factory overheads to calculate a TPAR for each product. It also contains calculations to evaluate the incremental revenue and costs of operating the factory on Sundays, including incremental costs of sales, sales assistants, supervisor bonus, and heating and lighting. The analysis finds the incremental revenue of $800,000 exceeds the incremental costs of $406,000, suggesting Sunday operation would be profitable.

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    PM- Jun 2009.ods

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    The document contains calculations for a throughput accounting ratio (TPAR) for three products (A, B, C) at a factory with a bottleneck pressing process. It shows the throughput contribution and factory overheads to calculate a TPAR for each product. It also contains calculations to evaluate the incremental revenue and costs of operating the factory on Sundays, including incremental costs of sales, sales assistants, supervisor bonus, and heating and lighting. The analysis finds the incremental revenue of $800,000 exceeds the incremental costs of $406,000, suggesting Sunday operation would be profitable.

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    © All Rights Reserved
    Download as ODS, PDF, TXT or read online from Scribd
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    27 views2 pages

    Throughput Accounting Ratio: 1462500 2362500 Bottleneck Process

    Uploaded by

    Farman Shaikh
    The document contains calculations for a throughput accounting ratio (TPAR) for three products (A, B, C) at a factory with a bottleneck pressing process. It shows the throughput contribution and factory overheads to calculate a TPAR for each product. It also contains calculations to evaluate the incremental revenue and costs of operating the factory on Sundays, including incremental costs of sales, sales assistants, supervisor bonus, and heating and lighting. The analysis finds the incremental revenue of $800,000 exceeds the incremental costs of $406,000, suggesting Sunday operation would be profitable.

    Copyright:

    © All Rights Reserved
    Download as ODS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Sheet1

    Throughput accounting ratio

    Bottleneck resource

    Total processing time 225000 450000

    Product Stretching Pressing Rolling


    A 900000 450000 562500
    B 562500 450000 900000
    C 900000 562500 900000
    2362500 1462500 2362500
    Bottleneck process

    TPAR= Throughput contribution per hour


    Factory overheads per bottleneck hour

    Throughput contribution
    Product A B C
    S.p 70 60 27
    Material cost 3 2.5 1.8
    T.c 67 57.5 25.2
    Bottleneck (Pressing) 0.5 0.5 0.4
    Throughput contribution per bottleneck 134 115 63

    Factory overheads
    Labour 2250000
    other overheads 18000000
    20250000

    Factory overheads per bottleneck per h 90

    TPAR 1.49 1.28 0.7

    Shutdown decision

    Incremental Revenue 800000


    Incremental costs:
    Incremental cost of sales 335000
    Sales assistants 45000
    supervisor bonus 8000
    Heating and lit 18000 406000
    394000

    Page 1
    Sheet1

    Workings
    (1) Incremental revenue and costs of sales
    Increment Revenue on Sunday (year) 800000
    Current revenue 3000000
    New Revenue 3800000

    Cost of sales
    Current costs 900000
    Incremental costs: 400000
    1300000

    New Gross profit 2500000


    gross profit margin 0.658 Or 65.8%

    Incremental costs of sales

    (2) Discount on purchasing


    Incremental purchasing (including discount) 1235000
    Incremental cost of sales 335000

    (3) Sales assistant


    Incremental hours (year) 1500
    Rate per hour 30
    Incremental cost for the assistant 45000

    (4) Heating
    Cost on Sunday 9000

    (5) lightning
    Cost on Sunday 9000

    (6) manager bonus 8000

    Page 2

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