Question

Dustco Pra exports cases to Spain. Each pallet of cases costs GHS2, 000 in material costs and are sold for GHS3, 000. Production and sales are limited by a shortage of highly trained quality control inspectors. Only 200 inspection hours are available per week. Every pallet is inspected and an inspection takes 30 minutes.

Other factory costs are GHS300, 000 per week.

Required:

Calculate the throughput accounting ratio.

Answer 1

Throughput Accounting Ratio = Throughput / (Labour + overheads)

Where:

Throughput = Sales - direct material

Throughput Accounting Ratio = 400,000 / 300,000

Throughput Accounting Ratio = 1.33

Calculation of Throughput:

Since we have only 200 hours per week for inspection, so

Pallets produced in a week = 200hours / 0.5 hour (30 minutes) = 400 pallets

Sales = 3000 * 400 = GHS 1,200,000

Material cost = 2000 * 400 = GHS 800,000

Throughput = 1,200,000 - 800,000 = GHS 400,000