A Limitation of the Theory of Constraints and Throughput Costing

question 32

Multiple Choice

A limitation of the theory of constraints and throughput costing is that:

• A) Labour and overhead costs may be built up to excessive levels
• B) Any product mix changes would not generate immediate cash flow effects
• C) Management's attention is too focused on long-term results
• D) a and b are limitations

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Definitions:

Rational Arguments

Reasoning conducted or assessed according to strict principles of validity.

Leucippus

An ancient Greek philosopher, considered one of the earliest proponents of atomism, the theory that the universe is composed of indivisible components.

Vacuum

A space entirely devoid of matter, or having a pressure much lower than atmospheric pressure.

Law of Conservation

A principle stating that in a closed system, mass (in classical physics) or mass and energy (in quantum physics), cannot be created or destroyed, but only transformed or transferred.