Editing Cost accounting (section)

==The development of throughput accounting==
{{main|Throughput accounting}}

As business became more complex and began producing a greater variety of products, the use of cost accounting to make decisions to maximize profitability came into question. Management circles became increasingly aware of the [[Theory of Constraints]] in the 1980s and began to understand that "every production process has a limiting factor" somewhere in the chain of production. As business management learned to identify the constraints, they increasingly adopted [[throughput accounting]] to manage them and "maximize the ''throughput dollars''" (or other currency) from each unit of constrained resource.

Throughput accounting aims to make the best use of scarce resources (bottleneck) in a JIT (Just in time) environment.<ref name="autogenerated1">Performance management, Paper f5. Kaplan Publishing UK. Pg 17</ref>

"Throughput", in this context, refers to the amount of money obtained from sales minus the cost of materials that have gone into making them.

=== Mathematical formulae===

:<math>\text{throughput cost accounting ratio} = \frac{\text{return}}{\text {factory hours}}</math>
:<math>\text{throughput} = \text{sales} - \text{material costs}</math>