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What is Throughput Accounting?

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Throughput accounting is a management accounting approach that focuses on the throughput of cash from sales and the truly variable costs of producing an additional unit of a product or service. It is designed to support management decision making. Throughput accounting is particularly useful for identifying products that are generating the most cash flow for each incremental unit of production.
Overview: Throughput Accounting
Function
Management Accounting
Definition
A method of management accounting focused on truly variable costs such as the material and labor required to produce a unit of production.
Value
Provides a way to measure certain management initiatives such as eliminating waste in a production process.
Related Techniques
Activity Based Costing

Management Accounting

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