ACCA PM · Chapter 4 · Question 4 of 10
A product currently has a throughput accounting ratio of 0.9. Which of the following actions would improve its TPAR?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Negotiating a lower price for the product's direct materials
Explanation
TPAR = (throughput per bottleneck hour) / (factory cost per hour). Lower material prices increase throughput per unit and so raise the ratio. Overtime at non-bottleneck stages adds cost without increasing output through the bottleneck, a lower price reduces throughput, and extra inventory ties up cash without increasing sales.
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