by Dr Lisa | POOGI Series, Theory of Constraints Finance, Accounting, and Cash Flow
Throughput is the rate at which the system generates money. It is similar to Gross Margin or Contribution Margin, but it is also different in that TOC (Theory of Constraints) does not consider direct labor as a variable cost, but rather as Operating Expense. The role...
by Dr Lisa | POOGI Series, Theory of Constraints Finance, Accounting, and Cash Flow
The core idea in the Theory of Constraints (TOC) is that every real system, such as a for-profit business, must have at least one constraint. If it were not true, then the system would produce an infinite amount of net profit. Because a constraint is a factor that...
by Dr Lisa | POOGI Series
What is the effect on the monthly Profit and Loss statement from this? Because cost accounting (and GAAP) requires that inventory absorb allocated costs, the effect is that all of the cost allocations from prior months that are attached to the inventory will be...
by Dr Lisa | POOGI Series
Conventional cost accounting assumes that incremental and isolated cost improvements are productive and in support of an organization’s goals, and that global improvement equals the sum of local improvements. Since a conventional cost accounting system relies on...
by Dr Lisa | POOGI Series
“Cost Accounting: Public Enemy #1 of Productivity” Way back in 1983, prior to writing his popular business novel “The Goal”, Dr. Eliyahu M Goldratt gave a speech by this controversial and confrontational title at a conference of Management Accountants. However, it was...
