ACCA PM · Chapter 4 · Question 5 of 10
Sigma Co has a bottleneck in its painting process. Details of three products are: Product A: price $40, direct materials $16, painting time 12 minutes Product B: price $55, direct materials $25, painting time 20 minutes Product C: price $30, direct materials $6, painting time 15 minutes Using throughput accounting, in what order should the products be ranked for production?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) A, C, B
Explanation
Throughput per bottleneck hour: A = ($40 - $16) / (12/60) = $120; B = ($55 - $25) / (20/60) = $90; C = ($30 - $6) / (15/60) = $96. Ranking by return per bottleneck hour gives A ($120), C ($96), then B ($90). Ranking by throughput per unit would wrongly put B first.
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