Throyughput accounting problem no 1 - READ AGAIN

Throyughput accounting problem no 1 - READ AGAIN -...

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Relevant Costing and Decision Making Problems I. Through put accounting – analysis of contribution margin with limiting factors. A company manufactures four products – J, K, L and M. The products use a series of different machines but there is a common machine, X, which causes a bottleneck. The standard selling price and standard cost per unit for each product for the forthcoming year are as follows. Particulars J K L M Selling Price 2000 1500 1500 1750 Cost: Direct Materials 410 200 300 400 Labor 300 200 360 275 Variable OHs 250 200 300 175 Fixed OHs 360 300 210 330 Profit 680 600 330 570 Machine – X Minutes Per Unit of Out put 120 100 70 110 Direct Materials is the only unit level manufacturing cost. Using a throughput accounting approach, the ranking of the products would be as
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Unformatted text preview: mentioned below. (Options) Ran k J K L M A 1st 2nd 3rd 4th B 1st 2nd 4th 3rd C 2nd 1st 4th 3rd D 2nd 3rd 1st 4th E 3rd 2nd 1st 4th Solution to the above Problem With the throughput accounting labor cost is assumed to be a fixed cost and contribution margin consists of sales less variable cost. The contribution per bottleneck minute is; J = 13.25(1590/120) selling price 2000 – direct material cost 410 = 1590/ 120 i.e machine minutes per unit of output. Therefore, contribution margin per machine hour = 13.25 Similarly other products; K = 13 = 1300/100 L = 17.14 = 1200/70 M = 12.27 = 1350/110 The rankings are L,J,K and M...
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This note was uploaded on 02/29/2012 for the course E 101 taught by Professor Sfere during the Spring '12 term at Abilene Christian University.

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Throyughput accounting problem no 1 - READ AGAIN -...

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