Throughput Accounting

Description

Learn how to apply The Theory of Constraints to Management Accounting. This book is the companion to the TOC Accounting Airtable Template.

The Theory of Constraints, a management philosophy derived from physics, assumes that constraints prevent organizations from achieving better performance. The Theory of Constraints (TOC) is based on a scientific method that has been developed and refined for nearly three decades by Dr. Eliyahu M. Goldratt. As a tool for business management, TOC is now accepted as a mainstream alternative to cost accounting.

Throughput Accounting

• Reveals a new management tool for managerial accounting and shows an alternative path for other management practices
• Enables managers to quickly see if their decisions increase profitability
• Demonstrates some of cost accounting’s flaws, and shows how these errors will lead to bad decision making
• Compares the paradigm of TOC-based throughput accounting with more conventional cost accounting methodologies and in the process, demonstrates a new way to solve the complex problems of modern management
• Allows business owners to base decisions on three simple numbers: Throughput, Investment and Operating Expense