Throughput accoounting and an application in a production firm

Production systems of the firms have changed along with the changing and developing technology. Traditional accounting systems are no longer adequate in the firms which use modern production systems. To solve this problem, new cost and management accounting systems have been developed. One of these systems is Throughput Accounting which is based on Theory of Constraints. Throughput accounting can provide more accurate cost information than the traditional accounting systems. In addition to this, throughput accounting emphasizes the importance of constraints through taking into the consideration of the cost of constraints. The purpose of this study is to emphasize how throughput accounting affects the firms? profit. At this point, to be able to show this effect, descriptive and exploratory case studies were applied in a production firm. Descriptive case study was applied to determine the existing cost system of the selected firm. Then, exploratory case study was applied to show how throughput accounting affects the firm?s profit. In conclusion, when the method of throughput accounting which recognizes the throughput time and the selling price of products was applied, it was determined that the profitability of product A and B was increased while the profitability of product C was decreased compared to the traditional method. When the method of throughput accounting which recognizes the throughput time and cost of the constraints was applied, it was determined that the profitability of product A and B was decreased, while the profitability of product C was increased compared to the traditional method.Keywords: Traditional Accounting Systems, Theory of Constraints, Throughput Accounting