Traditional cost accounting focuses on
the cost per unit of product, derived by looking at the sum
of the materials, direct labour costs and whatever additional
burden of shared overheads the product is expected to carry.
Similarly, in project costings, material, direct labour and
share of overhead burden are calculated before determining
the “cost” of the product or project. Cost accounting
does not take into account the amount of time spent by the
product or project at the bottleneck resource.
In doing calculations this way, many organisations forego
significant opportunities by pursuing deals that make money
at face value, but in reality consume disproportionately
large amounts of the bottleneck resource of the organisation.
At TOCCA, costing incorporates how much of the bottleneck
is being used, along with how much Throughput products or
projects generate. This enables our clients to leverage
their facilities far more effectively than would otherwise