Throughput Accounting

People who did not understand the message, find the Throughput Accounting a useless framework. But if you are a smart and open mind person, this book is for you. The theory is very well explained illustrating an alternative path to the old and nosense cost accounting. I advice you to buy it.

We've all read Goldratt's work on the Theory of Constraints (TOC) and the improvements that can be made in manufacturing processes. However, what is often overlooked in those books is the reality of getting these changes to work with our traditional cost accounting systems. TOC sounds great in theory, but how do we, as accountants, measure and report financial results in a way which supports TOC, yet still fulfills our responsibilities for external reporting? Don't we still have to apply overhead to products and calculate product costs?In this book, Corbett does a great job illustrating how our old cost accounting techniques are inadequate, and, more importantly, can lead us to make decisions which actually harm the bottom line. But he doesn't stop at simply pointing out the shortcomings of cost accounting, as most texts do. He takes the additional step of providing real financial statements and measures that support the concepts in TOC, and allow accountants to give production management the data they need. You can begin using these statements right away in your own company. In addition, he shows us how to use TOC to make various financial decisions. He even spends a chapter showing some of the criticisms of Throughput Accounting and provide warnings about its proper use.After reading this book you will realize that calculating a product cost is like buying a house and then trying to figure out how much of the purchase price to assign to the bathroom faucet. "Product Cost" is a fallacy, and impossible to determine. All that really matters is Throughput, the difference between selling price and totally variable costs.If you are a controller or cost accountant stuck between production managers who are eager to implement TOC improvements, and financial managers who still insist on overhead application and product costs, this is the book for you.

Me parece que brinda un excelente y convincente punto de vista teórico acerca de la superioridad del enfoque contable de la teoría de las restricciones sobre los enfoques tradicionales; además enseña un método claro y sencillo para quienes quieran tener un primer acercamiento de cómo manejar la información contable-gerencial tal como lo propone TOC. Utiliza un vocabulario amigable (no es difícil de entender) para quienes no hablamos inglés como lengua materna. I think it is a good and convincing book; it theoretically shows why throughput accounting leads managers to make better decisions than traditional methods. It also shows a general method about how we can manage throughput accounting statements for people who want to outline a new approach to management accounting, based on TOC. This book doesn't use complicated vocabulary for people whose native language is different from English.

I have to push myself to read most accounting books. This one pulled me along. As a Jonah's Jonah focused on eliminating market constraints I am constantly faced with the internal sell of new company policy. Often the resistance to change is couched in accounting terminology. This book provides the tools required to establish the mutual understanding needed for collaborative problem solving. Particularly helpful is the discussion relating TOC to TQM and JIT through their accounting issues. I highly recommend it.

"Throughput Accounting," by Thomas Corbett, is a good "hands on" book which is mostly correct. It draws on the mainstream TOC literature in accounting (i.e., The Haystack Syndrome), touches most relevant areas, and represents the first thing that I have seen (other than Goldratt's writings) that seems to meet the three criteria of constraints accounting (explicit consideration of constraints, throughput considerations, and decoupling revenues from costs). It takes throughput accounting beyond direct costing--discussing long-run considerations, pricing issues, scrap, multiple CCRs (constraints), treatment of home office expenses, multiple divisions, market constraints, and, of course, our new friend activity based costing. At 162 pages it's an easy evening's read--even with a large number of "accounting analyses"--for those familiar with the theory of constraints (TOC), and worthwhile for anyone implementing TOC. "Throughput Accounting" is a required item for the TOC financial management library.