Throughput Accounting, Part 2: Throughput Accounting in Practice
Six lessons that turn the lessons of the P&Q plant into a way of running a business: what to measure, how to decide, and how to control cost by growing throughput faster than expense.
- 6 lessons, about 98 minutes in all
- Free, no sign-up. Your progress is saved in this browser
- Certificate of completion when you pass all six quizzes
- 1 Where cost accounting goes wrongEvery costing method, absorption or activity-based, rests on one assumption: that capacity can be matched to demand. See why it fails, why a balanced line falls short, and why products don’t have costs. 16 min
- 2 Throughput, investment and operating expenseWelcome to simple, common-sense accounting. Money flows in through sales, out through truly variable cost and operating expense, and sticks inside as investment. Learn the definitions precisely, and why products don’t make profit, the company does. 16 min
- 3 The three questionsEvery decision comes down to three questions: what happens to throughput, operating expense and investment? Learn TOC’s decision process for capital spending, outsourcing and product viability, and practise it on five common decisions. 18 min
- 4 Measuring plants, channels and departmentsHow do you judge a plant, a sales channel or a customer without allocating shared costs? Value inventory at truly variable cost, keep shared costs at the level that shares them, and measure productivity as throughput per rupee of expense and investment. 14 min
- 5 Real cost controlThe cost world puts cutting expense first; the throughput world puts growing throughput first. Compare three cost-control strategies, see why cutting has a floor, and learn what real cost control looks like with the Five Focusing Steps. 14 min
- 6 Final case: the shirt factoryPut the whole course to work on a new plant. Find the constraint, choose the product mix, judge two improvement proposals and spot an inventory profit, then check yourself against the cost report. 20 min
- ✓Your certificateUnlocks when all six quizzes are passed.
Take Part 1: Why Cost Accounting Misleads first: this course builds on the P&Q plant throughout.