Theory of Constraints Throughput Accounting Basics
18 هزار بار بازدید -
6 سال پیش
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We are TOCICO Certified Experts in Throughput Accounting. This TOCICO webinar explores the problems of Cost Accounting and why you should not use it. Then the Throughput Accounting - T, I and OE solution for both global measurements and decision making is presented.
Presenters: Dr. Lisa Lang and Beau Ganas (CPA)
Copyright Science of Business, Inc. https://www.scienceofbusiness.com/thr...
Goldratt Theory of Constraints Throughput Accounting
What is Throughput Accounting?
Throughput Accounting is the Theory of Constraints method of accounting which does NOT allocate costs but instead places emphasis on increasing Throughput.
Throughput Accounting reflects the operating realities in which companies operate but is simple, yet highly effective. It creates alignment and agreement on decisions, between all levels of an organization. Greater clarity for making decisions in businesses can be rapidly achieved by the use of Throughput Accounting. Additionally, it requires very little to implement in terms of cost and/or effort, yet offers significant improvements over more traditional, complex, and expensive alternatives. Throughput Accounting can be utilized by a company, no matter where it is at in its life cycle, whether a newly-founded startup or a publicly traded company in existence for many years. Its effectiveness is not size or resource-dependent.
Throughput Accounting offers a vastly different take on accounting. I would say it is an improved version of accounting, but that would be to say Throughput Accounting was built on the foundation laid by previous accounting systems. Nothing could be further from the truth. Throughput Accounting is grounded in reality and was built from the ground up as a new form of accounting to achieve the aims other accounting systems attempt, but fail to accomplish.
Unique to Throughput Accounting alone is its ability to cause managers to view decisions with complete clarity and alignment from a financial perspective. With other forms of accounting, decisions are difficult to make, with each manager having his or her thoughts on the results of the decision. With Throughput Accounting, clarity is finally achieved and consensus from a financial perspective can be quickly reached.
Throughput Accounting is the only accounting system that properly prioritizes the three main aspects of a business: Throughput (T), Inventories (I), and Operating Expenses (OE). By utilizing Throughput Accounting, it is amazing how any management team can quickly and easily identify core problems in their businesses, create solutions to these problems, and achieve heights of profitability not previously thought possible. Traditional cost accounting systems are by far and away the largest impediment to productivity, with some even going to far to describe them as an "enemy of productivity." Throughput Accounting is the solution managers and accountants alike have been searching for so let's dig into it!
Throughput Accounting 101
For almost 200 years accountants have been charged with helping organizations make decisions utilizing financial information. For the vast majority of that time, allocation-based methods of accounting have dominated the landscape and are integral to almost every business decision made today. However, despite the ubiquity of allocation-based forms of cost accounting including activity based costing, standard costing, and lean accounting to name a few. All suffer from the same set of problems, namely:
Cutting costs is prioritized over creating flow in the business.
Throughput is not well understood or managed.
Allocations distort the manager’s ability to clearly understand impact of decisions.
Allocations encourage the building of inventories to increase profits.
Reductions in inventories are not valued as importantly as they should be valued.
Product Costs do not reflect true cost of capacity consumption and lead to poor decisions.
Pricing methods are cost-based, not value-based and conflict with the goal of generating profits.
A key distinction between Throughput Accounting and traditional cost accounting methods ...
Continued at https://www.scienceofbusiness.com/thr...
Presenters: Dr. Lisa Lang and Beau Ganas (CPA)
Copyright Science of Business, Inc. https://www.scienceofbusiness.com/thr...
Goldratt Theory of Constraints Throughput Accounting
What is Throughput Accounting?
Throughput Accounting is the Theory of Constraints method of accounting which does NOT allocate costs but instead places emphasis on increasing Throughput.
Throughput Accounting reflects the operating realities in which companies operate but is simple, yet highly effective. It creates alignment and agreement on decisions, between all levels of an organization. Greater clarity for making decisions in businesses can be rapidly achieved by the use of Throughput Accounting. Additionally, it requires very little to implement in terms of cost and/or effort, yet offers significant improvements over more traditional, complex, and expensive alternatives. Throughput Accounting can be utilized by a company, no matter where it is at in its life cycle, whether a newly-founded startup or a publicly traded company in existence for many years. Its effectiveness is not size or resource-dependent.
Throughput Accounting offers a vastly different take on accounting. I would say it is an improved version of accounting, but that would be to say Throughput Accounting was built on the foundation laid by previous accounting systems. Nothing could be further from the truth. Throughput Accounting is grounded in reality and was built from the ground up as a new form of accounting to achieve the aims other accounting systems attempt, but fail to accomplish.
Unique to Throughput Accounting alone is its ability to cause managers to view decisions with complete clarity and alignment from a financial perspective. With other forms of accounting, decisions are difficult to make, with each manager having his or her thoughts on the results of the decision. With Throughput Accounting, clarity is finally achieved and consensus from a financial perspective can be quickly reached.
Throughput Accounting is the only accounting system that properly prioritizes the three main aspects of a business: Throughput (T), Inventories (I), and Operating Expenses (OE). By utilizing Throughput Accounting, it is amazing how any management team can quickly and easily identify core problems in their businesses, create solutions to these problems, and achieve heights of profitability not previously thought possible. Traditional cost accounting systems are by far and away the largest impediment to productivity, with some even going to far to describe them as an "enemy of productivity." Throughput Accounting is the solution managers and accountants alike have been searching for so let's dig into it!
Throughput Accounting 101
For almost 200 years accountants have been charged with helping organizations make decisions utilizing financial information. For the vast majority of that time, allocation-based methods of accounting have dominated the landscape and are integral to almost every business decision made today. However, despite the ubiquity of allocation-based forms of cost accounting including activity based costing, standard costing, and lean accounting to name a few. All suffer from the same set of problems, namely:
Cutting costs is prioritized over creating flow in the business.
Throughput is not well understood or managed.
Allocations distort the manager’s ability to clearly understand impact of decisions.
Allocations encourage the building of inventories to increase profits.
Reductions in inventories are not valued as importantly as they should be valued.
Product Costs do not reflect true cost of capacity consumption and lead to poor decisions.
Pricing methods are cost-based, not value-based and conflict with the goal of generating profits.
A key distinction between Throughput Accounting and traditional cost accounting methods ...
Continued at https://www.scienceofbusiness.com/thr...
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