Throughput Accounting: A Guide to Constraint Management

194 Pages·2007·0.85 MB·English

by  Steven M. Bragg

T
HROUGHPUT
A
CCOUNTING
A G C M
UIDE TO ONSTRAINT ANAGEMENT
S M. B
TEVEN RAGG
JOHNWILEY&SONS,INC.

T
HROUGHPUT
A
CCOUNTING
A G C M
UIDE TO ONSTRAINT ANAGEMENT

T
HROUGHPUT
A
CCOUNTING
A G C M
UIDE TO ONSTRAINT ANAGEMENT
S M. B
TEVEN RAGG
JOHNWILEY&SONS,INC.
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Bragg,StevenM.
Throughputaccounting:aguidetoconstraintmanagement/StevenM.Bragg.
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ISBN-13:978-0-471-25109-5(cloth)
1.Theoryofconstraints(Management) 2.Productivityaccounting. I.Title.
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C
ONTENTS
About The Author xi
Preface xiii
1 Overview of the Theory of Constraints 1
DefinitionsfortheOperationalAspectsoftheTheoryofConstraints 1
TheOperationalAspectsoftheTheoryofConstraints 2
NatureoftheConstraint 5
DefinitionsfortheFinancialAspectsoftheTheoryofConstraints 7
TheFinancialAspectsoftheTheoryofConstraints 9
TheOpportunityCostofOperations 11
Summary 12
2 Constraint Management in the Factory 15
LocatingtheConstraint 15
ManagementoftheConstrainedResource 18
TypesofPolicyConstraints 21
TheConstraintBuffer 25
TheAssemblyAreaBuffer 29
ProductionScheduling 30
BatchSizes 34
MachineSetups—SalesPerspective 36
MachineSetups—ReductionEfforts 37
Summary 38
3 ThroughputandTraditionalCostAccountingConcepts 39
TheEmphasisonCostversusThroughput 39
TheEmphasisonProductCostversusSystemProfitability 41
VariationsintheTreatmentofLow-MarginProducts 42
TheEmphasisonBurdenedversusThroughputPricing 45
VariationsinScrapReporting 48
VariationsinVarianceAnalysis 50
TheTreatmentofDirectLabor 52
InventoryValuation 53
vii
viii CONTENTS
Activity-BasedCostingversusThroughputAccounting 54
DirectCostingversusThroughputAccounting 55
Summary 56
4 Throughput and Financial Analysis Scenarios 59
TheBasicThroughputAnalysisModel 60
TheLowPrice,HighVolumeDecision 62
TheLowPriceforExportMarketDecision 64
TheOutsourcedProductionDecision 64
TheIncreasedDownstreamCapacityDecision 66
TheIncreasedUpstreamProductProcessingDecision 67
TheIncreasedSprintCapacityDecision 69
TheAdditionalQualityWorkstationDecision 71
TheIncreasedConstraintStaffingDecision 73
TheNewProductAdditionDecision 74
TheProductCancellationDecision 76
TheAlteredProductPriorityDecision 77
TheRawMaterialConstraintDecision 78
TheConstraintintheMarketplaceDecision 81
ThePlantClosingDecision 82
UnderlyingConceptsoftheThroughputAnalysisModel 84
Summary 86
5 Throughput in the Budgeting and Capital Budgeting
Process 87
CapitalBudgetingwithThroughputAccounting 87
BudgetingforRevenuewithThroughputAccounting 91
BudgetingforNewProductswithThroughputAccounting 98
BudgetingforOperatingExpenseswithThroughputAccounting 99
BudgetingforProductionLaborExpenseswithThroughput
Accounting 101
BudgetingforSalesDepartmentExpenseswithThroughput
Accounting 103
Summary 104
6 Throughput and Generally Accepted Accounting
Principles 105
TheNatureofGenerallyAcceptedAccountingPrinciples 105
DifferencesBetweenThroughputandGAAPAccounting 106