CIMA P2 Syllabus A. Managing The Costs Of Creating Value - Throughput Accounting in Multi-Product situations - Notes ^{6 / 10}

Apply throughput accounting to a multi-product decision-making problem

1. Calculate the Throughput Return for each product (selling price – material cost)

2. Identify the Bottleneck constraint / Limiting Factor

3. Calculate the Throughput return per hour of bottleneck resource / limiting factor

4. Rank the products - starting with the product that generates the highest return per hour first

5. Calculate the optimum production plan, being sure not to exceed the maximum demand for any of the products.