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throughput accounting

CoursHeroTranscribedText: QUESTION SIX Simba Steel Co is involved in the processing of sheet metal into products A, B and C using three processes, pressing stretching and rolling. Like many business Simba Steel faces tough price competition in a mature world market. The factory has 50 production lines each of which contain the three processes: Raw material for the sheet metal is first pressed then stretched and finally rolled. The processing capacity varies for each process and the processing time per meter in hours is as summarized in the following table: Product A Product B Product C Pressing 0.5 0.5 0.4 Stretching 0.25 0.4 0.25 Rolling 0.4 0.25 0.25 The factory operates for 18 hours each day for five days per week. It is closed for only two weeks of the year for holidays when maintenance is carried out. On average one hour of labor is needed for each of the 225,000 hours of factory time. Labor is paid TZS. 10,000 per hour. The raw materials cost per meter and product prices are as follows; Product Cost in TZS. Selling Price in TZS. Product A 3,000 70,000 Product B 2,500 60,000 Product C 1,800 27,000 Other factory costs (excluding labor and materials) are TZS 18,000,000,000 per year. Simba Steel carries very little inventory. Required: (a) Identify the bottleneck process and briefly explain why this process is described as a bottleneck; (6 Marks) (b) Calculate the throughput accounting ratio for each product assuming that the bottleneck process is fully utilized; (10 Marks) (c) Assuming the Throughput of product C is less than 1, explain how you (4 Marks) could improve the TPAR of product. [Total: 20 Marks]

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