Limiting factor and throughput accounting approach

Reference no: EM133424613

Question: An entity manufactures three products: W, X, and Y. The products use a series of different machines, but there is a common machine that is a bottleneck. The standard selling price and standard cost per unit for each product for the next period are as follows:

W: Selling Price: 180$ : Direct Material & Labor cost $ 71: Variable production overhead $24 Fixed OH $36

X: Selling PRice: 150$ : Direct Material & Labor cost $40: Variable production overhead $16 Fixed OH $24

Y: Selling Price: 150$ : Direct material & Labor cost $80: Variable production overhead $20 Fixed OH $30

The entity is trying to plan the best use of its resources.

Using a traditional limiting factor approach, the rank order (best first) of the products would be

Explain the difference between traditional limiting factor and throughput accounting approach.

Reference no: EM133424613

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