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  • Throughput Costing

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    Saurabh Unmesh Upadhyay
    1K views8 pages
    This document discusses throughput costing and accounting. It provides definitions and formulas for throughput, net profit, return on investment, inventory turnover, and return on investment. It also discusses the theory of constraints, noting that constraints establish the limits of any system's performance. Finally, it briefly compares conventional cost accounting to throughput cost accounting and lists some merits and limitations of throughput accounting.

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    This document discusses throughput costing and accounting. It provides definitions and formulas for throughput, net profit, return on investment, inventory turnover, and return on investment. It also discusses the theory of constraints, noting that constraints establish the limits of any system's performance. Finally, it briefly compares conventional cost accounting to throughput cost accounting and lists some merits and limitations of throughput accounting.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    1K views8 pages

    Throughput Costing

    Uploaded by

    Saurabh Unmesh Upadhyay
    This document discusses throughput costing and accounting. It provides definitions and formulas for throughput, net profit, return on investment, inventory turnover, and return on investment. It also discusses the theory of constraints, noting that constraints establish the limits of any system's performance. Finally, it briefly compares conventional cost accounting to throughput cost accounting and lists some merits and limitations of throughput accounting.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    of 8

    GROUP MEMBERS:

    ROHAN PATEL

    MAMTA GALA
    DHARA PATEL

    What is Throughput Costing?


    Throughput costing is a system whereby

    only direct material cost is considered as variable and all other costs are treated as period cost.

    THROUGHPUT ACCOUNTING
    FORMULAS:
    1) Throughput = Revenue - Purchased material cost. 2) Net Profit = Throughput Operating expenses. 3) ROI = (Throughput Operating expenses)/ Inventory. 4) Inventory turnover = Throughput/ Inventory.

    5) ROI = (Net profit/

    Throughput)*(Throughput/Investment)

    THEORY OF CONSTRAINTS
    The fundamental assumption of TOC is that the

    constraint establish the limits of performance of any systems.


    TOC suggests the managers to focus on how to

    manage these constraints in improving the overall performance of their organizations.

    The constraint usually consists of :

    Managerial constraint 2. Capacity constraint 3. Market constraint 4. Logistical constraint


    1.

    CONVENTIONAL COST ACCOUNTING

    v/s

    THROUGHPUT COST ACCOUNTING

    MERITS OF THROUGHPUT ACCOUNTING

    LIMITATIONS OF THROUGHPUT ACCOUNTING

    THANK YOU.

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