KLP produce 3 products A, B, C. They have a bottleneck on one machine with it being operational for only 8 hours per day. Conversion costs (total factory costs) are £80,000 per day. The throughput contribution and hours in bottleneck for each product is as follows: Product Throughput contribution Hours in bottleneck process per unit A £80 per unit; 0.04 B £75 per unit; 0.05 C £180 per unit 0.10 Required: Calculate the throughput accounting ratio (TAR) for each product. Advise how the TAR can be used to optimise production when there is a bottleneck.

KLP produce 3 products A, B, C. They have a bottleneck on one machine with it being operational for only 8 hours per day. Conversion costs (total factory costs) are £80,000 per day. The throughput contribution and hours in bottleneck for each product is as follows: Product Throughput contribution Hours in bottleneck process per unit A £80 per unit; 0.04 B £75 per unit; 0.05 C £180 per unit 0.10 Required: Calculate the throughput accounting ratio (TAR) for each product. Advise how the TAR can be used to optimise production when there is a bottleneck.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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