Under throughput accounting, throughput is defined as:
Answer and explanation
Correct answer: D. Sales revenue less direct material costs
- Step 1: Throughput accounting defines throughput as the rate at which the system generates money through sales.
- Step 2: It is sales revenue less totally variable costs, which is mainly direct materials.
- Step 3: Labour and overheads are treated as factory costs.
Answer
Sales revenue less direct material costs.
Why not the others: In throughput accounting only material costs are treated as variable; labour is treated as a fixed cost. This is gross profit in the traditional sense. The number of units produced in a period: Throughput is a measure of money from sales, not output volumes.
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