Answer to Question #196235 in Other for King

Question

WAQ produces a single product, X, which passes through three different processes, A, B and C. The throughput per hour of the three processes is 12, 10 and 15 units of X respectively. The company works an 8-hour day, 6 days a week, 48 weeks a year. The selling price of X is £150 per unit and its material cost is £30 per unit. Conversion costs are planned to be £24,000 per week.

Required

(a) Determine the throughput accounting (TA) ratio per day.

(b) Calculate how much the company could spend on equipment to improve the throughput of process B if it wished to recover its costs in the following time periods. 2 years 12 weeks

(c) Calculate the revised TA ratio if this money is spent. (10 marks

Answer 1

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