Throughput Accounting

Core Conflict Cloud - Throughput Accounting - Theory of Constraints


Throughput Accounting provides clarity in what actions to take and provides answers to why questions, rather than a traditional and meaningless numbers overview.

Most accounting methods such as cost accounting, lean accounting, marginal and contributional accounting were derived from cost accounting, which assumes that people are paid per piece.

Many companies believe that their profitability can be enhanced by focusing the entire organization's attention on reducing costs.

The largest costs of any organization are related to employees and suppliers, this means that all the attention is spent on the least opportunity.

By separating the truly variable costs from operating expenses, and assuming that all hourly and monthly wages are an operating expense, will lead management to different, if not opposite conclusions.

"Cost Accounting was developed in the 1920's when people were paid per piece. How many of your staff members are paid per piece?"

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