ABSTRACT
The primary focus of Cost Accounting is per part or per unit cost reductions. Throughput Accounting uses primarily three performance metrics, namely Throughput (T), Investment (I), and Operating Expense (OE). In thinking about Throughput Accounting (TA), it is important to consider the following thought: TA is neither costing nor Cost Accounting (CA). Throughput Accounting is really focused on providing the necessary information that allows decision-makers to make better decisions. The sum total of all layers excluding profit amounts equals. The Throughput Accounting cost model contains only Total Variable Cost (TVC) and T. In a typical company, during the first part of the month, the actions of the entire work force are heavily influenced by standard Cost Accounting performance measures, which primarily have a “local” focus. Efficiency and utilization evolved as part of manufacturing management framework, consistent with the standard cost system.
