The following statements have been made about throughput accounting:
A Throughput accounting considers that the only variable costs in the short run are materials and components.
B Throughput accounting considers that time at a bottleneck resource has value, not elsewhere.
C Throughput accounting views stock building as a non-value-adding activity, and therefore discourages it.
D Throughput accounting was designed as a decision-making tool for situations where there is a bottleneck in the production process.
Which ONE of the above statements is not true of throughput accounting?
Which of the following is a definition of the throughput accounting ratio?
The following information is available for a single product:
Units produced 500
Time taken 200 hours
Maximum time available 200 hours
Materials purchased 1,000 kg costing $3,000
Materials used 800 kg
Labour costs $2,000
Overheads $1,500
Sales $9,000
What is the throughput accounting ratio for this product?
The following statements relate to the justification of the use of life cycle costing:
(i) Product life cycles are becoming increasingly short. This means that the initial costs are an increasingly important component in the product’s overall costs.
(ii) Product costs are increasingly weighted to the start of a product’s life cycle, and to properly understand the profitability of a product these costs must be matched to the ultimate revenues.
(iii) The high costs of (for example) research, design and marketing in the early stages in a product’s life cycle necessitate a high initial selling price.
(iv) Traditional capital budgeting techniques do not attempt to minimise the costs or maximise the revenues over the product life cycle.
Which of these statements are substantially true?
Company B is about to being developing a new product for launch in its existing market. They have forecast sales of 20,000 units and the marketing department suggest a selling price of $43/unit. The company seeks to make a mark-up of 40% product cost. It is estimated that the lifetime costs of the product will be as follows:
(1) Design and development costs $43,000.
(2) Manufacturing costs $15/unit.
(3) Plant decommissioning costs $30,000.
The company estimates that if it were to spend an additional $15,000 on design, manufacturing costs/unit could be reduced.
What is the life cycle cost?
Life cycle costing is the profiling of cost over a product's production life
Life cycle costing is particularly useful for products with a short expected life cycle.
When are the bulk of a product's life cycle costs normally determined?
Which of the following is NOT a way of maximising return over a product life cycle?
The following statements have been made about life cycle costing.
(1) Life cycle costing is needed in order to plan for the maximum length of commercial life for new products.
(2) Life cycle costing is particularly suited to businesses that manufacture products with long life cycles and who have significant research and development costs.
Which of the above statements is/are true?