From activity-based costing to throughput accounting
Article Abstract:
Activity-based costing (ABC) is not suitable for all companies. Organizations with minor product or process diversification, and small-sized and medium-sized businesses are examples of companies that are better off adopting alternative cost accounting systems. One company that took this approach was the cabinetmaker Bertch Cabinet Manufacturing Inc. It first implemented ABC across its organization but discovered soon enough that it was actually creating problems for the company. This compelled management to try throughput accounting which was found to be suitable to the synchronous manufacturing approach at Bertch Cabinet. Throughput accounting removes a variety of detailed costing entries that are usually found in traditional costing systems. The three elements of throughput accounting are throughput, inventory and operating expense.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1996
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Cost management at the IRS
Article Abstract:
The IRS has embraced the cost management philosophy originally espoused by the private sector after realizing that the public sector can also benefit from it. Cost management at the IRS has two important elements: customer focus and least-cost emphasis. This government office administers a yearly Customer Satisfaction Survey to determine public opinion about its service quality and to establish targets for service quality improvement. It has already taken steps to improve customer service, including the Tax System Modernization program and the Compliance 2000 initiative. As for its cost control objective, the IRS is developing a Cost Management Information System to be launched in 1997. This system will focus on process value analysis and activity-based management.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1996
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Measuring operational performance in a throughput world
Article Abstract:
Furniture manufacturer Foldcraft Co. switched from standard-cost measurements to synchronous manufacturing measurements after discovering that the former was actually contributing to the decline of the company. With the implementation of the synchronous manufacturing approach, managers are now able to make impressively quick, and precise decision making because they can find out if an order can be processed without reaching a bottleneck resource. Moreover, the synchronous manufacturing approach enables managers to ascertain if a potential order will affect the production schedule at a bottleneck resource. The new measures align employees, resources and market opportunities with global financial goals, thereby putting Foldcraft back in the growth track.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1996
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