ACCA PM December 2026: The Throughput Accounting Ratio Mistake That Flips Your Answer

The throughput accounting ratio (TPAR) only works if you deduct materials and nothing else. Subtract labour as well and you'll calculate the wrong number, then give the wrong advice.

Where the marks go

Throughput accounting questions in PM look generous: short calculations, a clear bottleneck, an obvious conclusion. That's exactly why the marks leak. Examiner reports for the paper repeatedly flag candidates who understand the idea but mis-define the inputs, so every later number is wrong.

The definition is fixed. Throughput is sales revenue minus totally variable costs, which in practice means direct materials (and any other genuinely variable cost such as bought-in components). Labour is treated as a fixed factory cost unless the question explicitly says it is paid per unit.

The ratio is return per factory hour divided by cost per factory hour. Return per factory hour uses the bottleneck: throughput per unit divided by the bottleneck hours each unit needs. Cost per factory hour is total factory cost (labour plus overheads) divided by the bottleneck hours available.

A TPAR above 1 means the product earns more per bottleneck hour than the factory costs to run. Below 1, it doesn't cover its costs. That single comparison is often what the requirement is really asking for.

Wrong answer vs correct answer

A product sells for £50, uses £20 of materials and £10 of direct labour, and needs 2 bottleneck hours per unit. Total factory costs (labour plus overheads) are £120,000 across 8,000 bottleneck hours.

Wrong: (50 - 20 - 10) / 2 = £10 return per hour. Cost per hour = £15. TPAR = 0.67, so "stop making it".

Correct: (50 - 20) / 2 = £15 return per hour. Cost per hour = £120,000 / 8,000 = £15. TPAR = 1.0, so the product breaks even on factory cost and any improvement lifts it above 1.

Same data, opposite conclusion. The labour deduction cost the candidate the calculation marks and the advice marks.

What to do

1. Write the definition first. Put "throughput = sales - materials" at the top of your answer before touching the numbers. It takes five seconds and stops the labour habit from contribution questions.

2. Find the bottleneck before you divide. Return per factory hour must use the scarce resource's hours, not total production hours. Circle the constraint in the question.

3. Finish with a recommendation. State what a TPAR above or below 1 means, then name one action: raise price, cut bottleneck time, or lower factory cost. The advice marks are the easy ones to lose.

The bottom line

TPAR questions are some of the most predictable marks in PM. Check ACCA's latest published pass rates and you'll see PM rewards candidates who get the basics exactly right, not those who know the most.

Materials out, labour stays in the cost pool. Get that right and the rest is arithmetic.